Privatisation of state-owned enterprises and some big-ticket initial public offerings of private companies are expected to shake the stock market in Vietnam this year and give foreign investors opportunities to tap the potential of Southeast Asia’s currently fastest growing economy.
Among the state-owned firms that could sell stakes are Mobifone, one of the three big mobile phone operators in the country and currently owned by Vietnam’s Ministry of Information and Communications. The operator’s market value has been estimated at $3.4bn in 2014 by HCM City Securities Corporation, and the value may reach more than $4bn, the analysts suggested. The highly profitable company currently has a whopping 50mn-customer base and about 30% in market share.
Another candidate is state-owned Vietnam National Shipping Lines, or Vinalines, which plans to sell 30% of its shares to strategic investors and 33.75% to the public, with the government holding the rest. As per its equitisation plan, it could also issue more shares to raise capital. Vinalines is the country’s largest shipping and port operator and was valued at $990mn in 2014, but still has a debt burden of around $572mn whose restructuring is expected to be completed by 2019 by converting debt from banks and creditors into contributed capital.
Vietnam Rubber Group and Power General Corporation 3, a subsidiary of Vietnam Electricity, the largest power company in Vietnam, could also embark on IPOs in 2016, according to Dang Quyet Tien, deputy director at the finance ministry’s department of corporate finance. The government this year could also divest further from beverage makers Habeco and Sabeco, as well as from textile maker Vinatex, national carrier Vietnam Airlines – of which Japan’s All Nippon Airways just bought an 8.8%-stake – and Petrolimex, Vietnam’s top oil product importer and distributor, Tien said.
There are also plans for an IPO of Becamex IDC Corp, an investment and development enterprise modelled after Singapore’s state investment firm Temasek Holdings and one of Vietnam’s leading industrial park and township developers with a strong footprint in the southern key province of Binh Duong, which currently owns 100% of the company. The planned IPO should reduce the provincial government’s stake in the company to 75% and slash the stake further to 50% by 2020. An earlier valuation showed that Becamex IDC, which has 28 subsidiaries and joint ventures covering finance, and insurance, construction, trading, real estate, information technology, mining, pharmaceuticals, healthcare and education, and operates a number of Vietnam’s most successful industrial parks and research centres, is valued at about $5bn.
Among the private companies planning a listing, Vietnam’s fast growing low-budget carrier VietJet seems to be among the best bets for investors. Since its launch in 2011, the carrier quickly captured a 40%-share of Vietnam’s domestic market and will likely surpass Vietnam Airlines in 2016 as Vietnam’s largest domestic carrier. About 10mn passengers were carried by VietJet in 2015 at an average load factor of nearly 90%, and 15mn are targeted for 2016. The airline has mandated BNP Paribas, Deutsche Bank and VietCapital to manage its IPO that is expected to raise up to $300mn.
While privatisation of state-owned enterprises has been delayed in Vietnam over the past years due to regulatory issues, the companies are now finding much better conditions to utilise a number of free trade agreements that Vietnam recently entered, including ones with South Korea, the European Union and the Russia-led Eurasian Economic Union, whereas negotiations on the Trans-Pacific Partnership concluded and the ASEAN Economic Community came into effect.  The country’s economy is also in a healthy state and forecast to outperform its Southeast Asian peers in 2016 and possibly even China in terms of GDP growth of up to 7%.