Mr Le Tien Truong, General Director of the Vietnam National Textile & Garment Group (Vinatex), tells VET's Do Huong about the preparations for and the expectations of the Group in its upcoming initial public offering (IPO).
What preparations has Vinatex made for the IPO?
|Mr Le Tien Truong|
Vinatex has been familiar with the process of equitisation and restructuring of State-owned enterprises (SOEs) into joint stock companies for 15 years. Over 90 per cent of its member units are already joint stock companies, while the parent company has been implementing the equitisation process along with four one-member units. The Group has therefore made relatively good preparations, including the establishment of internal management rules based on transparency, rearrangement of units, business restructuring, creating links among supply chains, conducting business valuation and information release, and holding roadshows to introduce Vinatex’s shares. The response from investors has been positive and helps the Group to be confident in the quality of its preparations for the IPO.
In terms of potential, I believe Vietnam will remain a textile and garment manufacturing and product centre for the world over the next several decades. In particular, the government will sign bilateral and multilateral trade agreements with the largest consumption markets for the textile and garment industry. This means that the potential for development is good, with the remaining issue being how to seize the opportunity for businesses to thrive and hold a strong position in the global textile and garment industry. After the IPO the operations of the Group will be more transparent and subject to supervision by the entire market, becoming more attractive to investors with dividends and an increasing share price.
Vinatex delayed its IPO to September 30 and the government approved the delay. How will the Group support the process of researching and assessing Vinatex’s shares?
In recent times the Group has been active in answering questions from interested investors, especially large companies. Under the old plan we had enough time to hold two roadshows, but now we have two more months for investors and Vinatex to hold meetings to fully discuss issues relating to development, investment strategy and business plans. The Group hopes that these discussions will create confidence among investors to participate in the IPO.
With 24 per cent of shares available to strategic partners, are foreign investors truly welcome? What are your expectations about the contribution of foreign investors in the context of integration, especially the upcoming Trans-Pacific Partnership (TPP)?
The IPO process is open to the public on the Ho Chi Minh City Stock Exchange (HoSE). All investors are welcome and foreign investors should be long-term investors, which is in keeping with our development strategy. Those with markets, customers, and experience in management and techniques will contribute to developing the Group.
The estimated dividend of 5 per cent is considered low, while the Group needs to invest in materials and increase its localisation rate in the future under TPP requirements. Do you think these two factors will impact on the appeal of the IPO?
Apart from interest in dividends, professional investors are more interested in enterprise value, including tangible and intangible assets such as customers, brand, and competitive position. Obviously, the near future is a time for group restructuring, investing to create internal supply chains, so the dividend should not be higher just yet. It is a premise for sustainable development in the long term, especially as we have the ability to leverage benefits from free trade agreements. The Group believes professional investors, investing for the medium and long terms, will recognise that and invest in the Group.
Do you feel any pressure as General Director during the Group’s transformation?
The process of executive leadership at a large group like Vinatex is continuous, with ongoing tasks and the inherited achievements of the previous generation. After working closely in the textile and garment industry for 17 years and being Executive Director General and Member of the Board of Directors at Vinatex for seven years, I have a complete understanding of the development strategy of the Group and I’m fully aware of my duties. The greatest focus is on completing the transformation by January 1, 2015. Along with this task, the Group needs to implement a synchronous production strategy towards improving the original design manufacturer (ODM) portfolio, the free on board (FOB, with discretion given to producers on material sources) portfolio, and enhancing the capacity of raw material production and design capacity. The Group also needs to implement enterprise restructuring towards a product chain, from design and production of materials and apparel to logistics, as well as well prepare to accommodate the conditions of trade agreements signed in the future. Along with solutions for human resources and development research, the Group needs to focus on building the Textile Research Institute into a technological research and product testing centre recognised by global buyers, conduct training with 50-60 per cent of the course work being the practical application of knowledge.