Divestment plans at State-owned enterprises attract little attention
Divestment plans at State-owned enterprises attract little attention
Many State-owned enterprises have announced their auction schedule for capital divestment plans, but not all of them are attracting customers.
Among the 122 million shares of Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank or LPB) brought to auction by the Vietnam Post on HNX recently, only 800 shares were registered for purchase by a few individual investors.
With a starting price of up to VND28,930 per share (US$1.27), which is nearly 15 per cent higher than LPB's market price, the auction attracted few buyers. LPB shares received attention for a few sessions after the information about the auction was officially announced, but quickly stagnated due to weak cash flow.
The recent auction of 35 million shares of Binh Duong Trade And Development JSC (TDC) with a starting price of VND27,900 per share was also regarded as a failure as only 50,000 shares were sold to four individual investors.
On auction day, TDC's market price was 10 per cent lower than the starting price of the auction, not to mention the time for the shares to be sent to the account took up to a month or even a few months, making investors displeased.
The auction of the capital portion of the State Capital Investment Corporation (SCIC) at Chau Duc Urban Development and Construction Joint Stock Company was also recently cancelled due to no investors participating.
NTP stock of Tien Phong Plastic JSC has reached a price of approximately VND70,000 per share at the end of January 2021 after SCIC announced a plan to divest capital in February, but the divestment has not yet been confirmed and NTP shares have dropped 10 per cent from its market price.
Similarly, BMI shares of Bao Minh Corporation also touched VND45,800 per share, but now are trading around VND38,000 per share.
At the end of last week, some investors registered to buy shares of HUD1 Investment and Construction JSC (HUD1) without carefully considering the health of this business. Interested investors must register to buy the whole lot with a starting price of VND75 billion, equivalent to the market price of HUD1 being traded on the floor.
Bad debts, member enterprises that have ceased operations, and suspended projects are the three most obvious disadvantages in this enterprise. In the 2017-2020 period, the debt/total assets and debt/equity ratios of HUD1 continuously increased, reaching nearly 96 per cent and 582 per cent in 2020.
The investment in HUD 1.02 Investment and Construction Joint Stock Company (VND12.75 trillion) and the investment in CIC DECOR Architecture and Construction Joint Stock Company (VND1 billion) have not brought about profits, causing HUD1 to make a provision for risks of VND4.43 billion.
Currently, both of these units are temporarily suspending production and business activities, so the ability to recover capital at these enterprises has not been determined.
The long-term capital contribution investment with Dai Thien Loc Company of VND13 billion to implement the Lien Bao-Bac Ninh project which has lasted since 2011 also faces potential risks in terms of investment.
