Divestment has not yet been announced: Buyers and sellers are still indifferent

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The wave of divestment

SCIC announced the list of expected divestment in 2021 with 88 enterprises, including 31 enterprises traded on the stock exchange. Among them, there are familiar names with charter capital of over 1,000 billion VND, namely Saigon Beer – Alcohol – Beverage Joint Stock Corporation (Sabeco) with charter capital of more than 6,400 billion VND (SCIC owns 36%); FPT Joint Stock Company with charter capital of more than VND 7,760 billion (SCIC owns nearly 6%); Song Da Corporation with charter capital of nearly 4,500 billion VND (SCIC owns 99.79%); Vietnam National Textile and Garment Group (with charter capital of VND 5,000 billion (SCIC owns 53.49%).

In 2021, it is expected that the revenue from equitization and divestment paid into the state budget will be VND 40,000 billion. In order to overcome the delay in divestment, in May 2021, the Ministry of Finance completed and submitted to the Prime Minister a project on restructuring state-owned enterprises, focusing on economic groups and state-owned corporations. countries in the period of 2021 – 2025.

Recently, the Ministry of Finance has issued Circular 36/2021/TT-BTC guiding a number of contents on state capital investment in enterprises and the management and use of capital and assets in enterprises specified in Decree No. Decree 91/2015/ND-CP, Decree 32/2018/ND-CP, Decree 121/2020/ND-CP and Decree 140/2020/ND-CP. Circular 36/2021 guides many provisions of Decree 140/ND-CP, of which the most important one is guidance on determining enterprise value according to cultural and historical values.

According to Mr. Dang Quyet Tien, Director of the Corporate Finance Department (Ministry of Finance), the new project will attach the responsibilities of ministries and branches more specifically and closely.

Some names that SCIC has not yet planned to divest when receiving or retaining according to the draft strategy such as Vietnam Dairy Products Joint Stock Company (Vinamilk), Military Commercial Joint Stock Bank (MB), Pharmaceutical Joint Stock Company, etc. Hau Giang (DHG), FPT Telecom Joint Stock Company (FPT Telecom), National Reinsurance Corporation… In addition, there are more than 10 other enterprises on the stock exchange that are highly appreciated by experts for their expertise.

In fact, over the past time, the group of stocks above has continuously broken its own price records. For example, AGM shares of An Giang Import-Export Joint Stock Company have had continuous ceiling gains, the market price has tripled within the past one month. Or BSR shares of Binh Son Refining and Petrochemical Joint Stock Company have planned to change the floor and the State will divest to less than 51%.

In particular, shares of DDV (DAP – Vinachem Joint Stock Company) are being sought by many investors. Information Vinachem will withdraw all 64% of capital in DAP – Vinachem has pulled DDV market price out of the bottom. DAP – Vinachem’s subsidiaries are eligible for divestment, including Lam Thao Superphosphate and Chemical Joint Stock Company, Southern Rubber Industry Joint Stock Company, Duc Giang Detergent and Chemical Joint Stock Company … particularly DAP – Vinachem is interested by investors, must wait for the opinion of the Prime Minister.

In addition, many subsidiaries have not yet been able to divest capital due to problems in real estate valuation. Particularly, DAP – Vinachem has reported to the Committee for Management of State Capital at Enterprises (CMSC) and the committee has reported and is waiting for the Prime Minister’s decision. Regarding the divestment plan, DAP – Vinachem is expected to withdraw to less than 51% or to 0%.

Currently, DAP – Vinachem has a good market, strong brand, profitable business and increasingly effective. The biggest advantage of DAP – Vinachem is owning a specialized deep-water port for chemical import and export activities in Dinh Vu, Hai Phong. This is what the “sharks” are looking at, wanting to acquire this business.

Stocks subject to state divestment have great potential, according to many investment funds, which will create attractive opportunities for investors in the market. When the shareholder structure changes, corporate governance changes, business activities will prosper, which is a good foundation for the development of the business.

Therefore, when there is more market information about the time and divestment price, it will create waves of up / down for related stocks.

Currently, the world has a large cash flow of up to 6 trillion USD because countries are constantly injecting cheap money to support the economy. Vietnam is an attractive investment destination for this capital flow. One of the attractions of trillion USD cash flow is that potential state-owned enterprises are being planned to divest.

Andy Ho, CEO of VinaCapital, said that the Covid-19 pandemic is not related to the price story of divestment, even considered a positive signal. However, the decisive factor for success still belongs to the potential of the business. Because normally, the “sharks” invest in state shares always for the future benefit, they do not pour money to speculate and wait for the shares to rise hot and make a profit.

In contrast, if divestment and equitization are active, the stock market will have more stocks with good asset quality and large capitalization, attracting investors. Therefore, the problem of how to make this “prescription” phase effective still lies with the businesses themselves.

The grains of grit

Optimistic signals of buyers and sellers are clear. But whether SCIC’s divestment list can really attract “quality” investors is still a big question mark.

Experience from attracting foreign investors at Binh Son Refining and Petrochemical Joint Stock Company (BSR) is an example. According to the equitization plan approved by the Government, after the IPO in early 2018, selling nearly 8% of state capital, BSR continues to offer 49% of shares to strategic investors so that after equitization, the State will continue to sell 49% of shares to strategic investors. The country holds about 43% of the shares.

However, due to the deadline for selling shares to strategic shareholders (as a rule, after 3 months of IPO), plus the reason for many changes in market movements since the IPO, the search for a partner has changed strategic cooperation becomes difficult, although BSR has been studied by a number of domestic and foreign investors before.

The BSR representative said that the regulations on the time limit for selling shares to strategic shareholders are not reasonable, and the preferential policies for foreign investors in the field of refining and petrochemicals are no longer attractive, making it difficult to attract investment. BRS’s foreign countries have difficulties.

PetroVietnam Power Corporation (PV Power) is also one of the few energy enterprises in Vietnam to be equitized in 2018. At the time of equitization, the enterprise actively organized events at home and abroad, providing information, as well as inviting strategic investors. However, the transactions of very large value with the 3-month period of selling shares to strategic shareholders are relatively short. Therefore, PV Power did not find foreign investors.

Meanwhile, Vietnam National Petroleum Group (Petrolimex) took nearly 5 years to find foreign investors. Nguyen Thanh Son, deputy general director of the group, said that Petrolimex changed its operating model to a joint stock enterprise in 2011, then started the process of finding strategic investors to change the way it is managed. under the direction of the Government. But it was not until 2016 that Petrolimex found a strategic partner, JXTG Group (Japan).

Even when investors are found, there are regulatory hurdles. For example, at the end of 2020, SCIC decided to divest all 36.3% of the capital held at the Vietnam Vegetable Oils Industry Corporation – Joint Stock Company (Vocarimex).

If the deal goes as expected, SCIC will collect more than 1,000 billion dong. After 2 failed attempts, this time, there were 2 investors registered to participate, namely Kido Group Joint Stock Company and Mr. Tran Hoang Nam personally. However, up to this point, the divestment has not taken place because of many regulations.

Kido is currently Vocarimex’s parent company, owning 51% of the capital. The divestment of state capital at Vocarimex is the bottleneck in the merger of Tuong An Oil and Kido. The policy of merging into the parent company was submitted to the Annual General Meeting of Shareholders by Dau Tuong An in mid-2020. However, the meeting cannot resolve this issue, but will conduct an extraordinary meeting when Vocarimex completes divestment.

At the recent AGM, Kido’s shareholders mentioned this again. Mr. Tran Le Nguyen, Standing Vice Chairman of the Board of Directors, cum General Director of the company said that the consolidation of Tuong An Oil depends on SCIC divesting capital from Vocarimex because Vocarimex owns 26% of Tuong An Oil’s capital. “Although it is not known when SCIC will divest from Vocarimex, surely, the plan to consolidate Dau Tuong An will take place this year,” Mr. Nguyen said.

Regarding this issue, Mr. Andy Ho said that large investment funds in the world are always interested in the Vietnamese market, but depending on the strategy of each fund. Large funds prefer to invest in businesses with a value of more than 500 million USD, or companies with large divestment volume, large stocks with liquidity, market potential, effective competition and good financial statements. . Meanwhile, small investors, individuals buy in small quantities or will join forces with institutional investors to buy in lots.

The good news, according to Mr. Andy Ho, is that domestic private investors have joined SCIC’s divestment route more. This makes it easier for SCIC to divest in small-scale companies, and at the same time shows that the group of private enterprises has more experience and potential.

However, the success of divestment of state capital still has to come from methodical strategic steps to attract investors, as well as the Government’s view on that business investment field.

Source: vietnamfinance.vn – Translated by fintel.vn