Ten divestments in spotlight for 2018
Ten divestments in spotlight for 2018
After 2017’s significant state capital divestment deals, the Vietnamese market is expected to see some of the most anticipated sales in 2018.
Petrolimex
Petrolimex (PLX), the country's biggest petroleum distributor, will divest 24.9 per cent held by the state in 2018 under the newly-issued Decision No.1232/QD-TTg signed by Deputy Prime Minister Vuong Dinh Hue. The stake is valued at VND18.67 trillion ($848.63 million).
The divestment will reduce state holdings in the firm to 53.7 from the current 78.6 per cent.
2017 marked an important milestone in Petrolimex's development when it was listed on the stock exchange. PLX's capitalisation value is in the top ten on the stock market.
Eight months after the listing, PLX rose nearly 50 per cent from the starting price of VND43,200 ($1.96) per share to VND64,800 ($2.94) per share at December 14. The value of state capital at PLX also rose from VND42.408 trillion ($1.93 billion) to VND64.6 trillion ($2.93 billion).
PLX now holds a 44 per cent market share. It concentrates on retail and batch sales. The company now has 2,400 petrol stations and will open 70-100 new ones a year which will enable it to compete with domestic and foreign rivals at the highest level.
PLX’s foreign strategic partner is JX Nippon Oil & Energy, who are interested in further increasing their holdings in the company.
ACV
ACV, the operator of 22 airports in Vietnam, will have to sell 20 per cent of its shares in 2018 and 10.4 per cent in 2019.
Since being listed on the Unlisted Public Company Market (UPCoM) in November 2016, ACV’s shares rose 3.5 fold from the starting price of VND25,000 ($1.14). Thus, the value of state capital rose by VND127.73 trillion ($5.8 billion) from VND51.92 trillion ($2.36 billion) to VND179.65 trillion ($8.16 billion).
ACV has submitted its plan to auction 20 per cent state stake in the third quarter of 2018 to the Ministry of Transport. The stake is valued at VND37.66 trillion ($1.7 billion).
ACV’s 2016 stake sale was among the hottest in the aviation industry during the year. Aeroport de Paris (ADP), which manages 37 airports, defeated many powerful rivals—including Singapore's Changi Airport International and Japanese investors Taisei and JATCO—to become ACV's strategic foreign investor.
However, the sales negotiations between ACV and ADP failed due to a disagreement over the price.
Vinatex
As planned, Vinatex will divest the entire 53.48 per cent stake held by the state this year. In January 2017, Vinatex was officially listed on the UPCoM. Subsequently, the VGT ticker rose from VND13,500 ($0.61) to VND15,780 ($0.71).
However, after one year of listing, VGT fell to VND11,400 ($0.518) at December 14. Despite unfavourable market conditions, Vinatex still remains one of the leading state-owned corporations.
Vinatex has nearly 120 subsidiaries and associated companies.
VNSteel
The state will divest a 57.92 per cent stake in VnSteel in 2018 and plans to sell the remaining 36 per cent in 2020.
Like Vinatex, VnSteel (TVN) has low liquidity in the stock market.
The TVN ticker is now valued at VND7,500 ($0.34), while its capitalisation is at VND5.085 trillion ($231 million).
VEAM
As planned, the state wanted to divest 52.47 per cent of VEAM in 2017, but the sale could not be done in 2017. Thus, the work is likely to be carried out in 2018.
VEAM now holds a 30 per cent stake in Honda Vietnam, 20 per cent in Toyota Vietnam, and 25 per cent in Ford Vietnam. In 2016, these investments brought in dividends of over VND10 trillion ($454.54 million).
In 2018, VEAM plans to list on the stock exchange. It will divest the remaining 36 per cent state holdings by 2020.
CC1
CC1 is a big name in the Vietnamese construction industry. Last July, the company was officially listed on the UPCoM with a capitalisation of more than VND2 trillion ($90.9 million). However, its share liquidity remains low.
In 2018, the Ministry of Construction (MoC) will divest the entire 40.5 per cent stake held by the state in CC1.
Besides MoC, the four other major stakeholders of CC1 are Tuan Loc Construction Investment Corporation, Duc Trong Mechanical Refrigeration JSC, Mr Le Thanh, and Top American Vietnam with respective stakes of 19, 15, 12.8, and 11 per cent.
Lilama
Lilama is under MoC, which plans to divest 46.88 per cent in this company in 2018 and 51 per cent in 2019. Lilama has joined many important thermo-power, oil refinery, and cement projects as a general contractor.
These include Vung Ang 1, the expanded Uong Bi 1, and Nhon Trach 1 and 2 thermal power projects as well as Song Thao cement plant and the Dung Quat and Nghi Son Oil Refinery projects.
Viglacera
In 2018, MoC will divest 20.62 per cent in Viglacera (VGC) and will divest the remaining 36 per cent held by the state in 2019.
In late 2016, Viglacera was officially listed on the Hanoi Stock Exchange at the starting price of VND15,600 ($0.7) per share. VGC is now valued at VND25,000 ($1.136) with good liquidity. The company's capitalisation is valued at over VND10.5 trillion ($477.27 million).
At present, many foreign-owned investment funds keep significant Viglacera holdings, with VinaCapital owning 4.84 per cent.
Vinapharm
State-owned pharmaceutical Vinapharm is likely to sell 65 per cent of its stakes in 2018. The 65 per cent stake includes the 35 per cent that the company failed to divest in 2017.
Besides the Ministry of Health, the two other major stakeholders of Vinapharm are Viet Phuong Group (17 per cent) and SAM Holdings (4.98 per cent).
Vinapharm (DVN) owns many valuable land plots in Hanoi and Ho Chi Minh City with a total area of around 11,000 square metres.
DVN also has strong financial support from leading local banks, such as Vietinbank, BIDV, Agribank, and Military Bank.
Hanel
As planned, the state will sell 29 per cent of Hanel in 2018. Hanel has a charter capital of VND1.93 trillion ($87.7 million). The company now owns a huge land fund of 120,000 square metres.
In addition to the ten deals, 2018 is expected to witness other remarkable state divestments in Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco), Binh Minh Plastics, Tien Phong Plastics, FPT, and Hancorp, among others.
