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Viglacera not considering raising its FOL

Released at: 14:44, 27/06/2017

Viglacera not considering raising its FOL

Photo: Viglacera

Foreign ownership limit at 49% with no thought being given to any increase.

by Duy Anh

Despite being one of the few State-owned enterprises (SOEs) belonging to the Ministry of Construction (MoC) to have undergone equitization, Viglacera Corp., the leading construction materials manufacturer in Vietnam, has not discussed raising its foreign ownership limit (FOL), which is currently at 49 per cent.

Since its equitization in 2014, Viglacera sold an additional 30 million shares, or 9.8 per cent, in its initial public offering (IPO) last July and subsequently issued another 12.5 million shares in an employee stock ownership plan (ESOP) a month later, which cut the State’s holding to 78.8 per cent from the previous 91.49 per cent.

In the latest move, it sold a further 39 per cent in a late-May public auction at an average price of VND16,175 ($0.7) per share, a 31.5 per cent premium on the starting price and bringing the State holding down to 56.7 per cent. A total of 1,026 investors subscribed for the issuance, with bids totaling 314.3 million shares for the 120 million on offer.

Ninety-two per cent, or 110 million shares, were sold to foreign investors, bringing the total number of foreign shareholders in Viglacera to 88, which together hold some 32 per cent, according to company data.

Among the keen foreign investors, Dragon Capital Group’s funds bought a total of 59.5 million shares out of the total 120 million shares on offer, subsequently raising its holding from 5.04 per cent to 17.56 per cent.

During the third quarter of this year, Viglacera plans to issue another round of ESOP shares, equal to a 5 per cent stake, with charter capital to increase from VND3.07 trillion ($135.1 million) to VND4.76 trillion ($209.5 million).

The State holding will therefore fall to about 54 per cent, with approximately 3 per cent left available under the FOL after the ESOP shares are issued. “As the remaining room is quite small, we are only thinking about conducting another round of ESOP after this year to eventually reduce the State ownership to 51 per cent by 2019,” Viglacera Deputy CEO Mr. Nguyen Anh Tuan told VET.

Once the shares have been issued and the ESOP added, using the share price on June 26 as a guide, its market cap should stand at some VND8.156 trillion ($358.6 million). Given decent daily liquidity in the stock and a high free float, this makes it a contender for the VN30 perhaps as soon as next year.

Whether or not Viglacera is in contention to be added to international indices for Vietnam also depends on whether the FOL remains in place. For now, “we have not discussed raising the FOL,” Mr. Tuan said.

Consisting of 40 member companies, including seven dependent units, 23 subsidiaries, and seven associates, Viglacera saw 2016 consolidated revenue rise by 4 per cent against 2015 to VND8.14 trillion ($358.2 million). After-tax profit of the parent company, meanwhile, reached an all-time high of VND440.8 billion ($19.4 million), up 79 per cent.

During the first three months of this year, Viglacera’s net profit rose VND97 billion ($4.3 million) year-on-year to VND243 billion ($10.7 million), 70 per cent higher than planned for the quarter. Significantly, the parent company alone saw net profit of VND184.1 billion ($8.1 million), 136 per cent higher than planned for the quarter and reaching 37 per cent of the annual plan, and an increase of VND88.3 billion ($3.9 million) year-on-year.

After the trading session on June 26, VGC shares closed at VND19,000 ($0.84), an increase of more than 17 per cent since the May 26 offering.

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