A two-storey bus of Vinamotor. The corporation's business focuses on assembling automobiles, engineering and transportation service. — Photo vatgia.com

HA NOI (Biz Hub) — Sacom Investment and Development Joint Stock Company (Sacom) is planning to take over the Vietnam Motors Industry Corporation (Vinamotor), said a report on the website baodautu.vn.

The general director of Sacom Do Van Trac has proposed the Transport Ministry to allow the firm to buy the entire State-owned capital in Vinamotor, comprising 85.58 million shares, equal to 97.7 per cent of the corporation's registered capital.

Sacom, which has the code SAM on the stock market, has registered to buy the shares at VND10,000 (US$0.47) per share.

If the purchase is approved, Sacom will have to spend VND855.8 billion ($40.17 million) to buy Vinamotor, which was equitised on June 1, 2014.

Experts said that Sacom's purchase was a surprise because there was not much connection between the businesses of the two firms.

In the proposal sent to the Transport Ministry, Sacom introduced its field of production that specialises in making bronze cables and electronic wires, while Vinamotor's business focuses on assembling automobiles, engineering and transportation service.

Earlier, the Government conveyed its approval to the ministry regarding divestment of the State-owned contribution capital from Vinamotor, which had few buyers in its parent company's initial public offering (IPO), launched in March 2014.

However, Trac said that Sacom's investment in Vinamotor aims to boost production and trade, contributing to the Viet Nam automobile assembling industry.

"We are confident about the purchase of the whole State-owned capital at Vinamotor and are determined make it an effective business," said Trac.

By September 30, 2014, Sacom had registered capital of VND1.3 trillion ($61 million) and assets worth VND3.07 trillion ($144.13 million). Its net revenue was VND1.14 trillion ($53.5 million), with VND104 billion ($4.8 million) in profits.

It's said that while planning to spend a large amount of money to buy a large volume of shares at Vinamotor, Sacom surely saw the development potential and profitability of the corporation, even though Vinamotor's current business results are not impressive.

At the shareholders' meeting held last May, Vinamotor set a target of earning VND388 billion ($18.2 million) in revenue, with pre-tax profit of VND11 billion ($516,400). Although the corporation has doubled its target for the number of cars to be assembled, it's estimated that the firm will earn VND650 billion ($30.5 million) in revenue by 2016, making VND33.7 billion ($1.58 million) in profits.

The corporation's products include buses and trucks that carry the brand names of Vinamotor and Transinco. Vinamotor still has operations in engineering, repair of automobiles and manufacture of spare parts, all of which are facing fierce competition from foreign partners in the country.

However, it's said that Vinamotor's attractiveness may lie in its member companies, where the parent company holds most of the shares, space and workshops in Ha Noi, such as Ngo Gia Tu Mechanical JSC, 3/2 Automobile Mechanical JSC and 1/5 Automobile JSC.

Vinamotor has chosen the Saigon – Hanoi Securities Joint Stock Company as a consulting agency to implement the divestment of the State-owned capital. The divestment is expected to be carried out this year. — VNS