Song Da Corporation reports pathetic IPO

December 25, 2017 | 21:55

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Despite the fact that Song Da Corporation’s initial public offering (IPO) was considered a large-scale deal, only 790,900 shares, equalling 0.36 per cent of the offered 219.68 million shares, were sold at the auction organised this morning, according to information published by the Hanoi Stock Exchange.

99.64 per cent of the shares on offer found no buyers

Notably, no foreign and domestic enterprises or organisations joined the auction. 229 individuals completed the purchase at the average price of VND11,959 apiece, showing that 99.64 per cent of the stake was unmarketable. After the deal, the state only acquired VND8.8 billion ($378,666) in proceeds.

Song Da offered 219.68 million shares at the initial price of VND11,000 ($0.48). After the sale, the corporation expected to acquire VND2.4 trillion ($105.68 million) in proceeds and increase its charter capital to VND4.5 trillion ($198.2 million).

Besides, Song Da planned to offer another 135 million shares, equalling 30 per cent of its charter capital, to strategic investors and sell 822,000 shares (0.18 per cent) to its employees.

After the equitisation, the state was to hold 51 per cent of the charter capital, equalling 229.5 million shares, and then decrease it to under 50 per cent by 2020.

Song Da Corporation conducted its equitisation as the company’s business efficiency has yet to improve. Notably, in 2015, the corporation earned VND17.03 trillion ($762.1 million) in revenue and VND452 billion ($18.7 million) in after-tax profit, while the Return on Assets (ROA) was 1.84 per cent, and the Return of Equity (ROE) 7.49 per cent. In 2016, its revenue decreased by 42 per cent to VND9.9 trillion ($436.1 million).

In the first six months of this year, Song Da Corporation recorded VND4.41 trillion ($194.3 million) in net revenue and VND118 billion ($5.19 million) in pre-tax profit, signifying year-on-year declines of 24 and 48 per cent, respectively.

Along with the modest business results, Song Da Corporation bears a large debt volume. As of the end of the second quarter of this year, the total debt-to-capital ratio is 76 per cent and the total debt is triple the company’s equity.

Established in 1961, Song Da Corporation is specialised in developing thermal power plants, roads, industrial factories, and real estate projects, as well as manufacturing construction materials.

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