Vinatex delays IPO again

The reason, according to Vinatex, is that potential investors did not have enough time between roadshows and the deadline for receiving bids to effectively research Vinatex and come to a decision.

Therefore, to give potential investors more time, Vinatex asked for and received permission from the prime minister to push the IPO to September 30.

In a previous move in 2013, Vinatex pushed its IPO date back by a year to July 22, 2014.

According to Vinatex’s government-approved equitisation plan, the group has a total charter capital of VND5 trillion ($237 million). Once the group goes public, the state will maintain a 51 per cent stake, 24 per cent will be offered to strategic investors, 24.4 per cent will be offered to the public, and 0.6 per cent to employees.

Regarding the attractiveness of Vinatex stock, Saigon Securities Inc., one of Vietnam’s largest brokerages by market share, said the revenue of Vietnam’s garment sector, including from Vinatex, will continue to rise commensurate with growing exports, and even more strongly if the pending FTA between Vietnam and the EU, the Trans-Pacific Partnership (TPP) and the Vietnam-South Korea FTA are signed.

However, Vinatex’s revenues are reliant on the import of input materials. In 2013 the firms’ revenue was $2.9 billion, but its imports came to $1.5 billion. The FTAs’ requirements concerning rule of origin may not be satisfied by company’s current operating structure.

To increase local materials in its production, Vinatex has invested in textile production and dyeing projects, but these are costly and take time to achieve profitability.

Another factor contributing to investors’ wariness regarding Vinatex shares is the parent company’s decreasing revenue and net profits, which were VND21.989 trillion ($1.04 billion) and VND833 billion ($39.5 million) in 2011, VND13.526 trillion ($641 million) and VND717 billion ($34 million) in 2012 and VND11.608 trillion ($550 million) and VND272 billion ($12.9 million) in 2013, respectively.

Vinatex earned consolidated revenue of VND25.250 trillion ($1.2 billion) in the first half of this year.

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