SOEs prepare for share bonanza

Vietnam Airlines might make an IPO in the second quarter of this year Photo: Le Toan

The Ministry of Transport has announced plans to complete the equitisation of 11 state-owned corporations in 2014.

The giant corporations up for equitisation include the Transport Work Construction Corporations (Cienco) 1, 4, 5, 6, 8, the Thang Long Construction Corporation (TLG), the Waterways Construction Corporation (Vinawaco), the Vietnam Automobile Industry Corporation (Vinamotor), the Waterway Transportation Corporation (Vivaso), the Transportation Design Consultancy Corporation (TEDI) and Vietnam Airlines.

According to Document 856/BGTVT-QLDN, just signed by Deputy Minister of Transport Nguyen Hong Truong, among these 11 corporations, nine must conduct an initial public offering (IPO) and equitisation within the first quarter of 2014. The two remaining corporations, Cienco 8 and Vietnam Airlines, will make an IPO in the second quarter as their equitisation plans have not been approved yet.

With charter capital of VND500-1,500 billion ($71.4 million) and a state ownership ratio under 49 per cent, the IPO of these nine corporations will yield about 4 million shares at par value of VND10,000 per share.

A senior official of the Ministry of Finance’s Corporate Finance Department said that improved performance of both the macro-economy and stock market was encouraging IPOs this year with increased demand from both foreign and domestic investors expected.

In 2013, the VN-Index rose 21.97 per cent, the best performer among regional stock markets.

Foreign indirect investment remained strong in Vietnam while it was slipping in other regional emerging markets, signifying further confidence in the year’s IPOs, said the official.

Due to the buoyant state of the stock market, Deputy Minister of Finance Tran Van Hieu said there was no reason to delay the equitisation process.

Of the major SOEs set to float, the IPO of Vietnam Airlines and Vinamotor are the most eagerly anticipated by investors.

In 2013, the national flag carrier Vietnam Airlines earned revenue and pre-tax profit of VND72.6 trillion ($3.4 billion) and VND533 billion ($25.3 million), 8.5 per cent and 34 per cent above the year’s targets, respectively, according to the airline’s press release.

The Vietnamese air industry looks set to take off in 2014 due to increasing local competition through fleet expansions, new routes, and planned share offerings. The industry is expected to be one of the world’s three fastest growing markets in 2014.

Meanwhile, early this year, chairman of the state-run Vietnam Textile and Garment Group (Vinatex), Vietnam’s most heavyweight textile giant, stated that its IPO, postponed last year, would be held by the end of March 2014.

“The timetable on this occasion seems to be more realistic. We also note that the company seems anxious to IPO given the current positive sentiment towards the textile and garment sector,” said Ho Chi Minh Securities Company (HSC) in a report sent to its clients on January 14.

In 2014, the wave of foreign investors looking for investment opportunities in the textile and garment industry is expected to swell after Vietnam joins the Trans-Pacific Partnership (TPP).

TPP is a high-standard regional free trade agreement with the US, Japan, Singapore and Vietnam among the 12 negotiators. Once the TPP deal is signed, the textile and garment industry looks set to be one of the biggest winners. It is estimated that the industry will bring about $30 billion in export revenue to Vietnam in 2020 and $55 billion by 2030.

Last week, the Viglacera Corporation, a building material producer, issued 307 million shares worth VND100,000 ($4.70) each as part of its equitisation plan. Viglacera is one of the country’s leading construction companies.

The Vietnamese government has also stated that, by 2015, it wants to see the restructuring of the Vietnam Railways and Vietnam National Shipping Lines (Vinalines) be completed.

The State Capital Investment Corporation (SCIC) is also set to float some attractive businesses this year. Under SCIC’s restructuring scheme, this year and next SCIC will withdraw capital from 376 businesses, including shares that have attracted the interest of investors such as BVH, FPT, BMP and PPC.