The country’s two stock exchanges have been taking large companies on board. Last Thursday the giant insurance firm Bao Viet Holdings, which has a charter capital of VND5.73 trillion (US$322 million), became the latest to list on the HCM City Stock Exchange.


The largest listed company in terms of charter capital, it listed at a reference price of VND38,500. But despite a first- quarter gross profit of VND314 billion, or more than 40 per cent of the whole year’s target, its price to earning ratio (P/E) for 2009 had been estimated by a securities company at a very high 43.5. The figure is twice that of Bao Minh Insurance Corp, which is also listed on the HoSE, and much higher than the 12.5 of the Ha Noi-listed bank ACB.


But by the end of May it exceeded this year’s profit target of VND775 billion, going on to reach VND842 billion.


The reference price was based on an evaluation of market conditions relative to the company’s profitability, chairman Le Quang Binh said.


Meanwhile, HSBC Insurance, which holds a 10 per cent stake in BVH, has already expressed the desire to acquire a further 8 per cent. Charles Gregory, head of the HSBC Insurance representative office, says the investment in BVH is a long-term proposition and market movements do not matter much.


Tomorrow will see the much-awaited listing of Vietcombank, in which the State still holds majority stakes, on the HoSE at a reference price of VND50,000.


Of the bank’s charter capital of more than VND12.1 trillion, only 9.28 per cent, or 112.3 million shares have been sold to the public and will be listed. The State still holds the remaining 90.72 per cent.


Vietcombank accounts for around 12 per cent of the deposits in the country’s banking system. Apart from banking operations, it also has interests in insurance, finance, securities brokerage, investment and real estate.


Another State-owned lender, Vietinbank, has also applied to list 11.11 per cent of its total charter capital, equal to 134 million shares, on HoSE. Trading in its shares is likely to begin in mid-July.


Vietinbank general director Pham Xuan Lap has said the reference price might be VND50,000, adding it will be determined by market movements.


The Ha Noi Stock Exchange will welcome several new firms in July, including PetroVietnam Construction (PVC), Vietinbank Securities Company, and Sai Gon-Ha Noi Securities Company, which have charter capitals of VND1.5 trillion, VND 900 billion and VND410 billion, respectively.


Raising capital


The joint stock DongA Bank has been approved by the State Bank of Viet Nam to increase its charter capital from VND2.88 trillion (US$160 million) currently to VND3.4 trillion. The increase, according to general director Tran Phuong Binh, is meant to strengthen its financial capacity.


It will also help the bank improve its technical infrastructure and expand its branch network and operations. Furthermore, banks are required to have a charter capital of at least VND3 trillion by the end of next year.


The shareholders of Tien Phong Bank (TPB) have approved a plan to enlarge the bank’s capital by VND750 billion to VND1.75 trillion this year.


In the first round of private placement, 25 million shares will be sold to domestic and foreign economic institutions at negotiated prices but below VND15,000.


In a later round, 50 million shares will be offered to existing shareholders at par (VND10,000). HDBank shareholders too have greenlighted a plan to augment capital from VND1.55 trillion now to VND2 trillion.


With the Government now discouraging State-owned groups from investing in non-core areas, banks, which in the past could count on them to buy their equity, find it harder to sell their shares.


Another major group of buyers, foreign investors, usually consider factors like management quality, good risk management, transparency and return on equity and other ratios before making investment decisions, something not all the banks can fulfill.


But if the stock market’s recent recovery continues, it may not be hard for the banks to raise funds. The downside to this is that their constant equity dilution, together with their ebbing fortunes because of the economic downturn, has resulted in lower dividends, making their shares less attractive.


Several banks, including Phuong Dong, Phuong Nam, and An Binh, have revealed that their foreign strategic shareholders want to increase their stakes.


The growth potential of the Vietnamese market, with its 85-million population and low rate of penetration by banking services such as cards, is a tempting factor.


FDI slumps in first half


The Ministry of Planning and Investment’s Foreign Investment Agency says the flow of foreign direct investment (FDI) in the first half plunged 74 per cent year-on-year to US$8.8 billion. It includes $4.7 billion for new projects and capital augmentation of $4.1 billion for older ones.


The services sector topped $4.5 billion, with more than half of that going into hotels, resorts, restaurants and amusement facilities.


Ba Ria-Vung Tau Province’s Sai Gon Atlantis Hotel project saw Winvest of the US committing to increase its capital from $300 million to $4 billion. Work on the project is set to kick off this year, with the 8,000-room five-star hotel complex opening in 2011. A $500 million safari park and the $600 million Toc Tien Urban Area Project, also in Ba Ria-Vung Tau Province, have received licences.


The processing and manufacturing sectors attracted around $1.56 billion in the first half and the real estate sector, $1.46 billion.


Of the 305 newly-licensed projects, China Steel Sumikin Viet Nam Joint Stock Company was the single largest at $1.15 billion. Its steel plant has been licensed by the Ba Ria-Vung Tau Industrial Zone Authority.


Ba Ria-Vung Tau has been the clear winner in the FDI stakes, attracting $6.46 billion in all.


Actual disbursements totalled $4 billion in the first six months against the year’s target of $11 billion. This province has prompted the agency to lower its target to $8 billion. Last year’s figure was around $11.5 billion.


The agency anticipated early this year that new FDI commitments might drop to $20 billion from a peak of $64 billion in 2008.


vietnamnet, vietnamnews