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MARD: VRG to complete equitization this year

Released at: 14:26, 18/09/2017

MARD: VRG to complete equitization this year

Illustrative image (Source: VNA)

Rubber group valued at $177.8 million, excluding massive land fund, taking it one step closer to a 2017 IPO.

by Quang Huy

The Vietnam Rubber Group (VRG), Vietnam’s largest rubber company, has been valued at VND4 trillion ($177.8 million), excluding its massive land fund, marking another step towards its equitization by the end of this year.

A decision signed by the Ministry of Agriculture and Rural Development (MARD) last week saw VRG submit its equitization plan to the government. Its initial public offering (IPO), which was scheduled for July, was delayed due to the government’s request that the company be audited by State Audit of Vietnam (SAV).  

“The delay was to ensure that State capital in the company was protected,” Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said, adding that the 420,000 ha of land VRG has in Vietnam, Laos, and Cambodia could be a huge advantage and highly profitable in the future.

“It will take months to collect feedback from other ministries and sectors on the equitization plan, but the company will complete its equitization by the end of this year and change to a joint stock company in 2018,” the Deputy Minister confirmed.

Mr. Tran Ngoc Thuan, CEO of VRG, said that although there are many interested investors, the company’s value is so high that it is difficult to find strategic investors. “We have set the criteria for selecting strategic shareholders, with the most important criterion being financial capacity,” he explained. “However, due to the huge capitalization, finding a strategic shareholder in just one or two years proved impossible.”

While agricultural stocks are usually not attractive to investors, VRG’s business results and prospects are quite convincing, with the company’s IPO representing good deal for many investors. In the first six months of this year, it posted VND8.1 trillion ($356.4 million) in revenue and VND1.5 trillion ($66 million) in after-tax profit, up 46 per cent and 169 per cent year-on-year, respectively.

According to its initial plan, it will offer 25 per cent during the IPO and expects a return of VND10 trillion ($440 million), while also setting aside 3 per cent in preferred shares for employees.

Last year, VRG successfully sold stakes in two of its subsidiaries and divested from 24 non-trading units, collecting more than VND2.9 trillion ($127.6 million) in return. It has targeted earning VND4.2 trillion ($184.8 million) in pre-tax profits this year, a year-on-year increase of 47 per cent, despite industry forecasts of challenges due to the unpredictable impacts of climate change.

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