M&A deal top priority to join industrial real estate sector: Gelex CEO
Gelex is planning to raise its ownership in Viglacera to the controlling level of 51 per cent
The top priority for the Vietnam Electrical Equipment JSC (Gelex) this year is to acquire the controlling stake in the industrial group Viglacera, chairman and CEO Nguyen Van Tuan said on Thursday.
Gelex now has a 5.54 per cent direct stake in the ceramic producer and real estate firm Viglacera. It has another 19.43 per cent stake in the latter through the member company Gelex Electric.
Gelex is planning to raise its ownership in Viglacera to the controlling level of 51 per cent. The Ministry of Construction is the biggest shareholder in Viglacera with a 38.85 per cent stake.
Viglacera is listing 448.35 million shares on the Ho Chi Minh Stock Exchange.
The acquisition is expected to be completed in the fourth quarter of 2020, the Gelex CEO told the firm’s annual shareholder meeting.
“The deal will allow Gelex to step into the industrial property sector as international companies are forecast to move out of China into neighbouring countries, including Viet Nam,” he said.
“The company will catch the flow of foreign capital into industrial parks within the next three years,” he said.
In 2020, Gelex will acquire four industrial parks in southern provinces in the second half of the year and Viglacera will be in charge of developing those parks, Tuan said.
The electrical equipment producer has purchased Long Son Industrial Park in Vung Tau Province, the chairman said.
“Gelex will build an ecosystem for the industrial parks, which includes low-priced housing and warehouse leasing as well as providing clean water and electricity.”
The company maps out two earnings scenarios for 2020 with the Viglacera deal being completed or not.
If the deal is successful, total revenue will be VND19.6 trillion. On the other hand, if the deal is unsuccessful, total revenue will be VND17.5 trillion.
Pre-tax profits in the two scenario are forecast at VND975 billion and VND735 billion, respectively. The figures are down 12 per cent and 33 per cent on-year.
Other M&A targets in 2020 are Dong Anh Electrical Equipment Corporation and copper rod and wire producer CFT Vina Copper.
Total investment capital prepared for 2020 is VND4 trillion, half of which will be spent on M&A activities. Funding for M&A deals comes from Gelex’s divestment of the logistics division and Dong Nai Port.
Gelex also plans to offload all of its shares in DAP Dinh Vu JSC in 2020 and launch an IPO for its member firm Gelex Electric in 2022.
The company has not planned a charter capital raise in 2020. The decision will be made after the M&A deal with Viglacera is completed.
Gelex will not pay dividend for 2019 and spend VND300 billion buying treasury shares. Between April 23 and May 22, the company bought back 18.27 million shares.
In 2019, total net revenue was VND15.3 trillion and pre-tax profit was VND1.1 trillion. The figures were 8 per cent and 20 per cent lower than full-year targets.
Gelex shares (HoSE: GEX) gained 1.5 per cent to trade at VND16,550 apiece on Thursday. Viglacera shares (HoSE: VGC) jumped 4.5 per cent to trade at VND19,900 apiece. — VNS
