State budget to have additional 22tr dong if 20 weak businesses sold out

18-Jun-2016 Intellasia | Tri Thuc Tre | 6:00 AM Print This Post

Since the government decided to divest state capital from Vinamilk eight months ago, the company’s stock continuously appreciated, making the state capital value here to hike from $2.4 billion to $3.3 billion, equal to 74 trillion dong.

The sharp increase raised the portfolio value of listed stocks that the State Capital Investment Corporation (SCIC) is managing to approximately 100 trillion dong, equal to 10 percent of Vietnam stock market’s capitalisation.

Apart from shares in SCIC’s category that were approved by the government to divest, CafeF’s calculation shows that the state can collect hundreds of trillion dong more if it determines to divest from businesses operating in professions that the state does not need to hold shares.

High-value businesses that the state is not necessary to hold stake are currently managed by Ministries and Groups such as Sabeco, Habeco, VEAM, Vinatex, Viglacera, Vietnam Brewery Co., Ltd, Ca Mau Fertiliser, and Phu My Fertiliser.

With its main business of oil and gas, the demand to hold dominant shares of PVN in the two fertiliser plants is probably not too urgent. PVN’s shares in these two factories now worth more than 11 trillion dong. Besides, the share in PVI Holdings – currently valued at two trillion dong – can also be sold.

Vietnam Steel Corporation (VNSteel), Viglacera, Vinatex can absolutely be sold like many other large corporations “sold out” in recent time such as Cienco 1, Cienco 4, Vinamotor, Gelex, Sowatco, etc.

A strange name but can be priced up to billions of dollars is Vietnam Engine and Agricultural Machinery Corporation (VEAM). The company’s major activity is to produce VEAM-branded engines and trucks. However, while its major activity has nothing substantial, VEAM owns extremely valuable assets i.e. 30 percent stake in Honda Vietnam, 20 percent stake in Toyota Vietnam and 25 percent stake in Ford Vietnam.

VEAM does not have much role in the operation of these joint ventures except the right to enjoy dividend amounting to trillions of dong each year.

*The stake in brewers can be more valuable than Vinamilk

Three Vietnamese largest beer companies including Sabeco, Habeco and VBL (the subsidiary of Heineken that produces such brands as Heineken, Tiger, Larue, etc.) have significant shares of the State. Currently, the Ministry of Industry and Trade holds dominating shares in Sabeco and Habeco while Saigon Commercial Corporation – Satra owns 40 percent stake in VBL.

According to CafeF’s estimates, the state can earn around 56 trillion dong if it sells out Sabeco and Habeco. Meanwhile, VBL’s stake worth about 25-30 trillion dong. A noteworthy point is in spite of ranking the second in market share (revenue) only, VBL’s profits over the past many years are larger than the total profits of the two main rivals combined.

As such, the total value of three beer companies ranges around 80-85 trillion dong – larger than the value of the state capital in Vinamilk. Once the government has had plan to sell Vinamik, probably there is nothing to “attach” when retaining stake in brewers.

In fact, state-owned enterprises are being managed by many different departments and localities. Each time of applying for direction to divest or equitise, there must go through many approval levels leading to slow reform and renovation process.

These shortcomings are expected to be somewhat limited as the government has now planned to submit to the National Assembly to establish a specialised agency to be the representative for the state i.e. the Committee for management of capital and assets in businesses that the state owns 100 percent capital or holds controlling shares – the group of businesses that is managing the total asset worth more than 5,000 trillion dong.


Category: Economy, Vietnam

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