SCIC divestment scheme faces challenges

Thursday, May 29, 2014 17:19

Workers control a production line at Dien Quang Lamp Co. The company is among 28 listed firms that the SCIC has to divest from between now and the end of the year. — Photo

HA NOI (Biz Hub) ― The State Capital Investment Corporation (SCIC) will have to withdraw capital from 28 listed companies between now and the end of the year, but its divestment scheme are facing challenges.

An SCIC restructuring plan requires the corporation to divest from 34 listed enterprises this year, but the corporation has only managed to withdraw from six firms in the first five months.

The six firms include Techno–Agricultural Supplying (TSC), Construction Company No. 47 (C47), Hai Phong Electricity Water Machine Assembly (DNC), Viet Nam National Seed Corp (NSC), Thac Ba Hydropower (TBC) and Northern Textile and Garment (TET).

According to news website, the shares of these companies saw very low liquidity. In the last three months, TSC saw the largest average trading volume of 40,500 shares per day, followed by TBC, with 16,800 shares per day.

TET share prices increased 74 per cent over the period, and the SCIC sold a 28 per cent stake of TET, gaining VND36 billion, or US$1.71 million.

TSC rose 36 per cent, and the SCIC unloaded 42 per cent of TSC's equity, earning VND60 billion, or $2.86 million.

The SCIC sold the shares of C47, DNC and TBC to individual investors, with a total revenue of around VND300 billion, or $14.30 million.

The SCIC divestments might prove to be opportunities for Pan Pacific Corp, which aims to increase its stake at NSC to 65 per cent, and Refrigeration Electrical Engineering Corp, which has raised its equity at TBC to nearly 60 per cent.

The estimated that, for the remaining companies in the divestment plan this year, exclusive of five firms whose data are unavailable, the SCIC holds about 135 million shares, with combined market values currently amounting to nearly VND2 trillion, or $95.24 million.

Although the total after-tax profits of the 28 companies reached VND2.7 trillion, or $128.57 million, last year, up 90 per cent over the previous year, many firms witnessed share prices decline over 20 per cent in the last three months. They included Constrexim Holdings (CTX), Dabaco Group (DBC) and Viet Nam Electricity Construction Corp (VNE).

Various firms saw very low liquidity with several hundreds to several thousands of shares traded per day, such as Ben Tre Pharmaceutical (DBT), Rang Dong Light Source & Vacuum Flask (RAL) and Tien Son Ha Tay Cement (TSM).

Yen Bai Cement and Minerals (YBC), in which the SCIC holds over a 40 per cent stake, had to delist from the local stock market on May 28, as it suffered losses for the third consecutive year.

The favourable move was seen in the SCIC holding of three million shares of Dien Quang Lamp (DQC). They had combined market prices of VND106 billion, or $5.05 million, 13 times higher than their book values, and an average daily trading volume of over 34,000 shares.

Some other shares, including Pha Lai Thermal Power (PPC), Hai Phong Securities (HPC) and Vinh Son–Song Hinh Hydropower (VSH), also showed significant liquidity with about 800,000 shares changing hands per day.

Inclusive of the unlisted companies, the SCIC is to divest from 298 enterprises in 2014. ― VNS

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