IPO of First Giant State-owned Firm in 2008

Mr Nguyen Van Viet, General Director of Habeco, said the company has a chartered capital of VND2,138 billion, or equivalent to 231.8 million shares at par value of VND10,000. The state holds 74.44 per cent of chartered capital, employees 0.56 per cent and strategic investors 10 per cent. The company will sell 15 per cent of its stake via IPO, or 34.77 million shares.

 

The starting bidding price is VND50,000 per share and the minimum bidding volume is 100 shares. The maximum bidding volume for an individual is VND173,800 shares, or 0.5 per cent of offered volume and the bidding volume cap for an institution is 347,700 shares, or 1 per cent of stake. The auction will open at 8:30 March 27, 2008 at Hanoi Securities Trading Centre (HASTC). After the IPO, Habeco will carry out procedures to list on the local stock market in the second quarter of 2008.

 

Strong growth driveAccording to Habeco’s business reports, the company always has annual growth of above 30 per cent, much higher than the industry average of 18 per cent.

 

In terms of capacity, Vietnam now has five beer brewers with individual annual capacity of above 100 million litres. Habeco owns one of these. Besides, the company has 14 partner companies by the end of 2006. Habeco has six beer production joint venture companies, one wine production company and three trading and investment joint stock companies. These companies are doing business very well, proven by high dividend payout ratios.

 

Among companies under construction, Vinh Phuc beer factory has an annual capacity of 200 million litres. Habeco’s affiliated companies are among 11 companies with yearly output of 20 million litres. Habeco’s size advantage is very good; as this brings development potential for Habeco when demand for beer, wine and beverages is rising on higher personal incomes in the country.

 

Mr Viet said after equitisation, Habeco will continue expanding the holding company, expected to grow at 20-25 per cent annually and pay dividend at 11 per cent a year upwards. The company also expands its business fields to other industries such as offices for lease, hotels, restaurants, financial investments and other products. To raise more funds for investment, Habeco will raise its chartered capital to VND3,000 billion in 2009 and VND3,500 billion in 2010 and mobilise capital from other channels. In parallel with the capital raise, Habeco will reduce state ownership to 51 per cent in 2010.

 

However, Habeco is now only selling its products in Vietnam, not in foreign markets. The financial reports of Habeco are sound. The capital surplus is big, usually equal to net fixed asset amount. Short-term investments are usually bank deposits.

 

With the big amount of unused funds, solvency indexes of Habeco are good. In 2006, the current ratio was 11.17, current payment ratio was 5.7 and quick asset ratio was 5.23. However, in spite of effective investment in affiliated companies and profuse cash, Habeco is still weak in investment because it fails to fully utilise its strong financial source. Its long-term investments are not only injected in affiliated companies, but also in loans to other companies. If Habeco used this source in more profitable fields, its financial investment result would be better.

 

Mr Viet said in the event of a stock market slump, Habeco has weighed up this IPO. “In fact, the IPO of Habeco was programmed in late 2006 and was approved by the Prime Minister. In 2007, the company carried out corporate valuation and finalised other legal procedures for the IPO. I believed that with the tradition and power of its workforce, and its business results and relationships with strategic partners, the Habeco IPO will be successful,” Viet said.

However, many investors said the starting price of VND50,000 per share is unsuitable, because since Habeco announced the starting bidding price on January 2, 2008, the VN-Index has already fallen more than 30 per cent. But to date, there has been no adjustment to the initial offering price.
Lan Anh