The Vinalines initial public offering (IPO) on September 5 is just around the corner. What investment opportunities are there for investors?
Vinalines will auction off more than 488.8 million shares or 34.8 per cent of its stake on September 5, thus reducing the state holding to 65 per cent. As shareholders of Vinalines – the country’s largest ship-owner, largest port operator, and leading logistics services provider – investors will share the ownership of the biggest closed-value chain of seaports, shipping, and logistics services in the country.
In 2017, shipping made up 42 per cent of Vinalines’ total revenue, while ports and logistics accounted for 28.7 and 29.3 per cent, respectively.
Regarding debts, the company’s long-term debts were reduced from VND3.07 trillion ($135.84 million) in 2015 to VND1.6 trillion ($70.79 million) in 2017, while its equity rose from VND10.37 trillion ($458.84 million) to VND12.5 trillion ($553.09 million) over the same period, thus reducing the long-term debt/equity ratio from 30 to 13 per cent.
Business performance is improving, with net revenue and pre-tax profit forecast to hit VND505 billion ($22.35 million) and VND180 billion ($1.96 million), respectively, in the second half of 2018. The figures will be raised to VND1.05 trillion ($46.37 million) and VND222 billion ($9.8 million), respectively, in 2019.
Vinalines enjoys favourable market conditions as Vietnam’s trade volume is forecast to continue growing in the coming years from 299 million tonnes to 842 million tonnes by 2030, while the domestic cargo volume is also projected to ascend to 115.5 million by 2020 from 72 million tonnes in 2016.
What is more, the enforcement of upcoming free trade agreements will drive imports and exports of seafood, farm produce, textile and garment, and rice between Vietnam and international markets. With these advantages, investors who invest in Vinalines shares with par value of VND10,000 ($0.44) per share now will make huge profits in the future.
Many forecasts show that there is a possibility that Vinalines could join the string of companies that recently failed with their IPOs after the collapse of the strategic stake sale. How are you planning to avoid this?
The failure of the strategic state stake sale in early August raised doubts about the attractiveness of Vinalines. We could not find a strategic investor because of the time limitations required by legal documents. Potential investors did not have enough time for due diligence and decision-making.
In recent days, many more powerful domestic and international groups, including SK Group, SK Shipping, SK Securities, and many others, showed their interest in the IPO. We worked with many of them. Besides, logistics and seaports remain among the most attractive industries to foreign investors. Vinalines is a springboard for any investors who want to expand to and in Vietnam, as well as go international.
Vinalines now still holds stake in a number of loss-making units. What is the giant’s divestment plan?
We will divest stakes in 18 member companies, nine of which will be totally divested. These nine are Vitranschart, Tin Nghia Industrial Park Development JSC, Petec, Sesco, Inlaco Haiphong, Haiphong Maritime Investment and Trading JSC, Dong Do Marine, OSTC (previously named NOSCO), and Vinalines Nha Trang. We will cut our holding in nine others, namely VOSCO (from 51 to 49 per cent), Vinaship (from 51 to 36 per cent), Haiphong Port (from 92.56 to 65 per cent), Danang Port (from 75 to 65 per cent), Can Tho Port (from 99.05 to 51 per cent), Cam Ranh JSC (from 80.9 to 51 per cent), Cai Lan Port (from 56.58 to 51 per cent), Transvina (from 56 to 51 per cent), and Khuyen Luong Port (from 49 to 36 per cent).
What are the group’s investment plans to cash in on the future growth of international trade?
Vinalines is planning to invest in deep seaport development. In the north, we aim to develop six container and general terminals at Lach Huyen International Gateway Seaport. In particular, we are waiting for the government’s approval to build berths 3 and 4 and will co-operate with our partners to develop a grain handling port. In central Vietnam, we will also invest in eight container terminals, five general berths, and four others for oil tankers at Lien Chieu Seaport in Danang. In southern Vietnam, we will develop two more wharves at Vinalines Hau Giang General Port.
In logistics, Vinalines will develop ICDs and logistics centres in Lach Huyen-Haiphong, Danang, Binh Duong, Dong Nai, and Hau Giang with an area of 10-30 hectares each. We will develop an integrated supply chain to create added value for our customers. For shipping, we will develop a fleet with a total load of 1.1 million deepwater tonnage, with container vessels making up 13 per cent.
By 2020, we aim to maintain our leading position in the Vietnamese maritime industry and become a famous brand in the region by 2030.