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Three MoC enterprises propose IPOs for Q3

Released at: 16:04, 01/08/2016

Three MoC enterprises propose IPOs for Q3

Photo: Duc Anh

Plans in place for three to move ahead with equitization following lengthy delays.

by Duy Anh

Three State-owned enterprises (SOEs) in the construction sector are to propose conducting their initial public offering (IPO) during the third quarter of 2016, according to a Ministry of Construction (MoC) report released on July 21.

After a three-year overhaul, the Song Da Corporation, the Housing and Urban Development Corporation (HUD), and the Urban and Industrial Zone Development Investment Corporation (IDICO) are expected to finalize their businesses valuations and propose IPO plans to the Prime Minister shortly.

Song Da Corporation, HUD, IDICO, and the Vietnam Cement Industry Corporation (Vicem) are the last four critical enterprises of MoC to not have undergone equitization. Ten of MoC’s 14 such enterprises had done so by the end of 2014.

According to MoC the four have experienced difficulties during their equitization process. Song Da and Vicem’s planned to conduct their IPO in the first quarter of this year but were delayed by the transfer of the loss-making Ha Long Cement Company.

Song Da was reportedly trying to sell its entire holding of 26.1 million shares in the Vietnam Italy Steel Company (VIS), equal to 53.04 per cent of the total. It was unable to divest the shares during July as planned due to market volatilities.

According to the report, nine MoC corporations divested a total of VND193.4 billion ($8.8 million) worth of investments for VND233.5 billion ($10.6 million), equal to 120 per cent.

Shareholder meetings approved the equitization plans of the Construction Corporation No.1 (CC1), the Building Materials Corporation No.1 (FICO), the Construction Machinery Corporation (COMA), and the Vietnam National Construction Consultants Corporation (VNCC).

Production value of MoC enterprises reached VND76.1 trillion ($3.4 billion) in the first half, reaching 47.2 per cent of the target. 

Value was down against the first half of 2015 due to divestments from subsidiaries of some of the parents companies. Construction value stood at VND28.5 trillion ($1.3 billion), equal to 46.6 per cent of the target and representing 89.6 per cent of result in the same period last year. 

Total output significantly declined compared to the same period last year, as old contracts come to an end and new contracts are either being identified or still in the middle of negotiations.

The value of building materials reached VND31.6 trillion ($1.4 billion), equal to 48.5 per cent of the target and 109.2 per cent of the result in the first half of 2015. Consulting value stood at VND1 trillion ($44.8 million), or 46.9 per cent of the target and 164.2 per cent of the first half last year. Other production value was VND14.9 trillion ($668 million), or 45.9 per cent of the plan and equal to 100.5 per cent of last year. 

Some enterprises recorded higher growth in their production activities year-on-year while others saw lower than expected growth and a decline year-on-year, including Song Da, HUD, the Song Hong Corporation, and the Vietnam Water Supply Sewerage and Environment Construction Investment Corporation (Viwaseen). 

The real estate market saw steady growth in the first half due to increases in outstanding credit and a decline in inventory. 

There was also a steady increase in the number of transactions. House prices were stable compared to 2015 and inventory mainly consisted of land plots from undeveloped projects. 

As at the end of May the government’s $1.5 billion housing credit support package had disbursed a total of $1.1 billion. Total outstanding credit in the real estate sector as at the end of April stood at VND415.4 trillion ($18.6 billion), up 5.76 per cent compared to the end of 2015.

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