Photo: Duc Anh
Original plan for Q2 IPO put back due to issues with valuation.
The Vietnam Cement Industry Corporation (Vicem) is expected to conduct its initial IPO in the fourth quarter of this year instead of the second quarter, as originally planned.
Sources close to Vicem and the Ministry of Construction (MoC), under which Vicem falls, said the State-owned corporation “has been working hard to conduct its IPO later, in the fourth quarter of 2016.”
Formerly known as the Union of Cement Plants, Vicem was founded in April 1980. The corporation mainly operates in the cement production and distribution sector, with a total capacity of 20 million tons of cement a year.
It accounts for up to 34 per cent of Vietnam’s cement output and has prestigious brands in all three regions of Vietnam, such as Hoang Thach in the north and Ha Tien in the south.
The delay in the IPO stems from the corporation acquiring Cement Ha Long and Cement Song Thao in March this year. Both companies have recorded poor performance in recent times, lacking financial capacity and accruing major debts, according to MoC.
Cement Ha Long’s losses at the time of acquisition were over VND3 trillion ($136.4 million) while Cement Song Thao’s were VND500 billion ($22.7 million).
According to Stoxplus, a stock research agency, the acquisition of the loss-making companies dampened the appeal of Vicem’s IPO and resulted in difficulties in its valuation. Foreign investors from Thailand and Indonesia had been interested in the IPO but the excess supply in Vietnam’s cement market has seen them hesitate.
Cement Ha Long reported total revenue of VND1 trillion ($45.5 million) for the first five months of this year. Cement and clinker totaled 831,000 tons, up 21 per cent compared to the same period of 2015.
“This was the result of contributions from Vicem along with affiliate companies in helping Cement Ha Long survive through hard times,” Vicem CEO Tran Viet Thang was quoted as saying. Vicem is addressing the existing problems at Cement Ha Long, after which the corporation can undergo a valuation for equitization, he added.
Vicem recorded total revenue of VND32.6 trillion ($1.48 billion) in 2015, double the figure in 2014, according to its 2015 financial report. Pre-tax profit for 2015 was VND3 trillion ($136 million), also double the result in 2014.
Vicem has eight affiliates: Vicem Hai Phong, Vicem Hoang Mai, Vicem Ha Tien, Vicem Bim Son, Vicem Hoang Thach, Vicem But Son, Vicem Hai Van and Vicem Tam Diep. Five of the eight have undergone equitization and changed to joint stock companies: Vicem Hoang Mai, Vicem Bim Son, Vicem Hai Van, Vicem But Son and Vicem Ha Tien.
There are more than 62 companies with approximately 100 plants - full-cycle factories and grinding stations - in Vietnam’s cement market.
LafargeHolcim may withdraw from Vietnam due to the oversupply of cement in the domestic market. The largest multinational cement producing company in the world by installed capacity, LafargeHolcim is present in 90 countries and focuses on manufacturing cement, aggregates, and concrete.
Along with Vicem’s IPO, MoC is also planning to conduct an IPO for other State-owned giants under its management, such as the Song Da Corporation (SDC), the Housing and Urban Development Corporation (HUD), and the Urban and Industrial Zone Development Investment Corporation (IDICO).