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Experts have forecast that Vietnamese companies will list their shares on foreign stock markets in 2008-2009.
In an interview given to Reuters on the sideline of the investment conference held in Singapore several days ago, Chairwoman of the State Capital Investment Corporation Le Thi Bang Tam said that Vinamilk and FPT would be the two first Vietnamese companies to list their shares on foreign bourses, possibly in 2007 and 2008.
Vinamilk, or the Vietnam Dairy Products Joint Stock Company, which now holds 75% of the market, is valued at $930mil. Foreign credit rating firms consider Vinamilk an attractive investment. The company’s products see an annual growth rate of 20% per annum, while the company can set up a distribution network itself. Vinamilk has a network of 200 distributors, more than 1,000 agents and 94,000 retail points across the country. Vinamilk has attempted to expand its business to other fields, like beer and coffee. In addition, it has made capital contributions to other projects and businesses, like V-Pack (which specialises in packing production), VF1 fund certificates, the Horizon apartment building on Tran Quang Khai street in HCM City, the projects on supplying water in Thu Duc and Gia Dinh districts.
FPT has the market value of $680mil. Since making a wonderful debut on December 13 at the HCM City Securities Trading Centre, when its shares were traded at VND400,000, or 40 times higher than the face value, its shares have been witnessing continuous increases.
Meanwhile, Cavico is taking necessary steps to have its shares listed on the US bourse. In May, Cavico merged with a US-based company whose shares are being transacted on the low-grade stock market Prink Sheets, Agent 155 Media Group. After the merger, Agent 155 Media Group changed its name into Cavico Corporation, and the share code was changed to CVCP. Before the merger, Agent 155 Media Group had nearly stopped its operations; only its legal name and share code remained. Experts said that if successful, Cavico would be able to enter the US bourse at very low cost.
In addition to the three companies, Kinh Do Confectionary Company, Saigon Securities Incorporated (SSI) and Trung Nguyen Coffee, and some 50 other companies are trying to collect information about procedures and requirements to list on foreign bourses.
Marketing to Vietnamese companies
According to Nguyen Duy Hung, Chairman of SSI, soon after SSI sent word that it may list on the Singaporean stock market, the Singaporean Stock Exchange tried to contact and has tried to keep in contact with the company regularly. On December 15, three officials of the Singaporean Stock Exchange flew to Vietnam to participate in the first transaction of SSI shares at the Hanoi Securities Trading Centre. In March, Singapore’s biggest consultancy firm, UBO Asia, arrived in Vietnam to discuss issues related to the listing of Vietnamese companies in Singapore.
Most recently, the Republic of Korea’s (ROK) Stock Exchange organised a workshop in Vietnam, introducing opportunities to raise funds in the country. Director of the stock exchange Kang Kwang Ha said that Vietnamese companies were listed among the top customers that ROK securities watchdogs wanted to attract. Vietnamese companies can list all, or just a percentage of their shares, on ROK’s bourse, while still listing shares on the domestic market at the same time.
Providential Holdings Inc, a law firm, which many American Vietnamese are working for, has seen big demand by Vietnamese companies to list on foreign bourses. The company’s leaders have flown to Vietnam regularly this year to introduce opportunities for listing.
Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), said that it was the right time to plan for listing on foreign bourses. If listing on foreign bourses, companies will be able not only to raise funds, but also to apply international standards in corporate governance.
Legal framework for listing abroad not set up yet
Two years ago, VAFI urged the State Securities Commission (SSC) and the Ministry of Finance to promulgate legal documents paving the way for Vietnamese companies to list on foreign bourses. However, except for the frame regulations stipulated in the Securities Law, no official document with detailed regulations has been enacted so far.
One of the most complicated problems now is the guidance on payment in foreign currencies. Vietnamese companies will have to pay dividends to shareholders in foreign currencies, which is prohibited under the current forex regulations.
“It seems that SSC is not ready for this yet,” said Mr Hai, when trying to come up with reasons why SSC has still not worked out a legal framework for this.
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