SCIC pours up to US$345.6 million in Vietnam Airlines (HVN)

The State Capital Investment Corporation (SCIC) plans to invest VND8 trillion (approximately US$345.6 million) in Vietnam Airlines JSC (HVN). The amount is equal to 25 per cent of HVN’s charter capital.


Vietnam Airlines will issue VND8 trillion in shares to existing shareholders to raise its charter capital. And SCIC represents the Government to buy the shares,” Nguyen Chi Thanh, general director of SCIC, said during a press conference last Thursday.

The two sides had a meeting to work out the HVN share price, Thanh added.

Vietnam Airlines is creating a share offering plan to raise its charter capital and needs to get opinions from the State Securities Commission of Viet Nam. Meanwhile, SCIC’s mission is to price HVN's share value.

In order to define the share offering price, Vietnam Airlines has to evaluate its own value based on its five-year business plan. But COVID-19 is a biggest challenge for the carrier’s business plan since there is no indication of when the pandemic will be over and international flights can resume.

“Amid the spread of COVID-19 around the world, it is very difficult to create a business plan for Vietnam Airlines. If there is no business plan, we can not judge the enterprise’s value. Only when Vietnam Airlines opens international flights, can its business improve,” Thanh said.

So to price Vietnam Airlines, SCIC will select a well-known accounting firm with a good reputation to assess the carrier’s value. That accounting firm can use one of a number of business valuation methods, Thanh added.

On the Ho Chi Minh Stock Exchange, HVN's share price declined 0.65 per cent to finish Monday at VND30,650. The shares increased nearly 7.4 per cent since the beginning of 2021.

In its third-quarter result, Vietnam Airlines posted a decline of more than 70 per cent to VND7.6 trillion in consolidated revenue. It reported a loss of nearly VND4 trillion in profit after tax.

As for the carrier's performance in 2020, its consolidated revenue reached VND42.5 trillion, including VND33 trillion from its parent company. The results exceeded their respective targets by VND1.9 trillion and VND448 billion.

It was projected to suffer a loss of VND14.4 trillion. Of the total, its parent company’s loss in 2020 was estimated at more than VND12 trillion, which was VND2.42 trillion lower than the previous forecast.


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