Three PetroVietnam subsidiary IPOs in 3 months
Three PetroVietnam subsidiary IPOs in 3 months
Three big companies of the Viet Nam National Oil and Gas Group (PetroVietnam) will make their initial public offerings (IPOs) in the next three months, under equitisation plans approved by Deputy Prime Minister Vuong Dinh Hue late last week.
The three companies are: Binh Son Refining and Petrochemical Company (BSR); PetroVietnam Power Corporation (PV Power); and PetroVietnam Oil Corporation (PVOil), valued at US$2 billion, $1.5 billion and $610 million, respectively.
The IPOs will pump 916,403 million shares into the market, offering a massive opportunity for investors interested in oil and gas stocks at a time global oil prices are recovering.
Oil prices have recovered from the bottom price of $27.58 per barrel on January 18, 2016 to around $50 per barrel at presenty.
From the beginning of this year, many oil and gas stocks have seen increases of 20-50 per cent, including the PetroVietnam Gas Joint Stock Corporation (GAS), PetroVietnam Transportation Corporation (PVT), PetroVietnam Drilling (PVD) and PetroVietnam Fertiliser and Chemicals Corporation (PVC).
According to Phan Dung Khanh of Maybank KimEng Securities, the medium-term development outlook for oil and gas stocks is positive.
The three companies, BSR, PV Power and PV Oil, are in good shape, according to their financial reports.
BSR
Under the approved equitisation plan, BSR, which manages and operates Dung Quat Oil, has a charter capital of VND31 trillion (US$1.36 billion), and is the largest firm everto IPO ever. The face value of its share is VND10,000.
Nearly 242 million shares, or 7.79 per cent of its charter capital, would be sold to the public at an initial price of VND14,600 per share. At this price, BSR would have value of $2 billion.
PetroVietnam would hold 43 per cent of BSR’s charter capital while selling 49 per cent to strategic investors and 0.21 per cent sold BSR’s employees.
Strategic investors in BSR must have a minimum charter capital of VND10 trillion and be profitable during the most recent years with no aggregated loss.
Priority will be to investors with experience in operating refineries and oil distribution to support BSR’s oil refinery plant after its privatisation.
According to its most recent financial report, BSR earned revenues of VND38.6 trillion in the first half of this year, rising by 15.4 per cent over the same period last year. After-tax profit jumped 266 per cent to VND3.8 trillion in the period.
PV Power
PV Power is the second largest power supplier in Viet Nam after national utility Electricity of Viet Nam (EVN), with a market share of around 12 per cent. It is also among the most profitable companies of PetroVietnam. The company has a charter capital of VND23.4 trillion.
It will put up about 469 million shares, or 20 per cent of the charter capital, for the IPO at an initial price of VND1.48 billion.
PetroVietnam would hold a 51 per cent stake in PV Power after its equitisation, but this will be reduced to below 50 per cent from 2019, depending on the company’s debt restructuring process.
It is planned that around 676 million shares, or nearly 29 per cent of its charter capital, would be sold to strategic investors.
Founded in 2007 as a wholly-owned PetroVietnam subsidiary, PV Power now operates eight power plants, including four thermal power plants.
Its net revenue is estimated to reach VND31.5 trillion in 2017, a year-on-year increase of 12 per cent, for after-tax profits of VND1.9 trillion, up 25 per cent over last year, according to the HCM City Securities Corporation.
Nguyen Xuan Hoa, general director of PV Power, said that the company plans to contribute 20 per cent of the nation’s total electricity output in the next decade.
PVOil
At PVOil, the State’s stake would be cut to 35.1 per cent after equitisation.
The company has a charter capital of VND10.3 trillion, 20 per cent of which will be offered to the public at an auction held on the HCM City Stock Exchange in January, 2018, at an initial price of VND13,400 per share.
More than 462 million shares, or 44.72 per cent of its charter capital, will be sold to strategic investors.
Foreign ownership of PVOil is capped at 49 per cent of its charter capital.
About 1.8 million shares, or 0.18 per cent of its charter capital, will be be sold to its employees.
PVOil is now the second largest petrol distributor in Viet Nam after Petrolimex, with a market share of 22 per cent.
Last year, the company reported revenues of VND34 trillion and before-tax profits of VND530 billion.
This year, its revenue was expected to reach VND55.5 trillion with before-tax profits of VND520 billion, both exceeding annual targets.
