Cement, steel set for 10% increase in sales

Cement and steel consumption in Viet Nam is expected to increase by 9 to 10 per cent to 56 million tonnes and 6.5 million tonnes, respectively, this year, according to the Ministry of Industry and Trade (MoIT).

"Demand may change if the economy strongly recovers this year because there would be an increase in construction projects," said Nguyen Van Diep, an official of the Viet Nam Cement Association .

Diep said that during the year, about 12 new cement plants would come into operation with a total estimated output of 10.18 million tonnes per year.

He said with the new operations, the sector would fully meet domestic demand.

"One part of the cement output will be used for export," he added

As for prices, Diep said that they would remain unchanged until Tet (Lunar New Year). "After that, however, the price will depend on the price of coal and electricity," Diep said.

Last year, Viet Nam produced 53 million tonnes of cement. More than 50.2 million tonnes were consumed domestically.

Along with cement, steel consumption is also predicted to increase this year.

The MoIT said that the improved economic situation would push domestic construction steel consumption to 6.5 million tonnes, up 10 per cent over last year.

However, the ministry warned that the steel sector would face tough competition this year due to cheap imported steel.

Steel imported from China and ASEAN countries was more competitive thanks to more efficient production and low import tax rate, the ministry said.

MoIT said that this year's steel price would continue to be affected by credit interest rate fluctuations and the price of steel ingots on the global market.

Listed firms fear hostile takeovers

Nearly 60 per cent of companies listed on the Ha Noi Stock Exchange say that the risks of becoming acquisition targets after going public put pressure on their business operations, according to a new survey conducted by the exchange in conjunction with the magazine Securities Investment.

The Ha Noi market has a number of companies with capitalisation of under VND300 billion (US$15.4 million) each, leaving them vulnerable to institutional or large individual investors, and efforts by some companies to acquire controlling stakes in others by buying up listed shares are not a new phenomenon.

Last year, Hung Vuong Co (HVG) made a bid to buy a 26-per-cent stake in An Giang Fisheries (AGF) while Phu Nhuan Jewelry (PNJ) made a similar play for Sai Gon Fuel Co (SFC).

But the most scandalous acquisation attempt last year was the effort of Vien Dong Pharmaceutical Co (DVD) to take over Ha Tay Pharmaceutical (DHT). DVD chairman Le Van Dung spent his own money to buy up over 60 per cent of DHT shares on the stock exchange and then sold the shares to DVD. Dung is now under investigation for violations of securities regulations.

The survey also found that most listed companies did not feel pressured by stock price volatility. Nearly 87 per cent of companies surveyed said that share price fluctuations did not affect their business operations, while only 5.9 per cent said share price volatility had a negative effect.

The survey also found that 92 per cent of listed companies, while finding disclosure requirement burdensome initially, now realised the benefits of disclosures in encouraging more modern and transparent management practices and financial reporting, helping them cut costs and increase business efficiency.

Ha Noi Stock Exchange general director Tran Van Dung said the exchange had applied software which would support companies in disclosing information on the exchange's website.

Dung said firms would be trained and given accounts to use this tool, with pilot training for 50 selected companies to be conducted next month.

"These companies will announce their fourth-quarter 2010 results in April using this method," he said, adding that all listed companies could be able to use the software to disclose information by the end of the year.

Both the State Securities Commission (SSC) and the HCM City Stock Exchange (HOSE) also have plans to upgrade their disclosure processes. The SSC is developing an information diclosure system (IDS) in colloaboration with the Luxembourg Agency for Development Cooperation, while HOSE is conducting tests for its own software system.

Over 1,200 public companies, half of which are listed, are subject to disclosure requirements.

State guaranteed corporate bonds curbed

In response to the last year's defaults by troubled State-owned shipbuilder Vinashin, the Government has issued a new regulation requiring all enterprises issuing corporate bonds under a Government guarantee to first have their plans appraised by the Ministry of Finance and approved by the Prime Minister.

Decree No 01/2011/ND-CP requires these enterprises to disclose three consecutive years of financial statements that have been audited by the State Audit of Viet Nam or an independent auditing organisation licensed to operate in Viet Nam. The financial statements must reflect no losses or overdue debts during those years. The purpose of the bond issuance must also be limited to debt restructuring, high-tech applications, or energy or production projects approved by the Prime Minister or National Assembly.

The decree was drafted in response to State-owned shipbuilder Vinashin's near-bankruptcy last year. Vinashin had issued US$600 million worth of corporate bonds in 2007 with a Government guarantee which was triggerred by last year's difficulties. Vinashin had also received $750 million in proceeds from the first issue of Vietnamese Government bonds overseas, back in 2005.

To further tighten controls over Government bond funds, Decree No 01 also includes provisions requiring that funds mobilised from T-bill issuance be used for socio-economic development or Government debt purposes, or to offset temporary State budget shortfalls.

Government bond proceeds may also be used to re-finance banks or other financial institutions as necessary to ensure national finance security.

The new decree also includes provisions applicable to municipal bonds, requiring that proceeds from such bonds only be applied to projects included in a city's five-year plan. Bond proceeds may not exceed 80 per cent of the total budget of the project.

Meanwhile, the CEO of the Viet Nam National Coal and Mineral Industries Holding Corporation Ltd, Tran Xuan Hoa, has announced that State-owned mining giant Vinacomin will issue $500 million worth of bonds overseas in the second or third quarter of this year.

The overseas bond issue was approved by the Prime Minister last year but was delayed, Hoa said. Most of the funds raised from the issue would be used for three power generation and mining projects, he added. ANZ Bank, Citibank and Credit Agricole would serve as consultants for the bond issue.

Rubber processing waste treatment line on stream

A rubber-processing wastewater treatment facility was handed over last week from the Koastal Eco Industries Co Ltd, a subsidiary of the Singapore-based EMS Energy Group, to Kon Tum Rubber Co Ltd.

Located on 6,000sq.m in Kon Tum Town's Yachim Commune, the Yachim Rubber Processing Wastewater Treatment facility can treat 1,130 cubic metres of wastewater per day.

The VND11 billion (US$550,000) facility was designed with a two-step process: a primary physio-chemical treatment combined of flocculation, and a complete biological treatment including anoxic and aerotank treatment.

French company sets up bio-gas plant at factory

France's Rhodia Energy Services yesterday opened its first bio-gas plant in Viet Nam at the Nuoc Trong cassava starch factory in Tay Ninh Province.

The US$1 million plant will produce more than 15,000 cubic metres of biogas every day using wastewater from the cassava plant.

It will use the advanced fermentation method applied in many countries around the world. Biogas is 25 – 30 per cent cheaper than other types of fuel and the plant is also expected to help cut carbon-dioxide emissions by 12,000 tonnes a year.

Private producer to sell electricity to national grid

Thien Tan Investment-Construction JSC, the investor and owner of Ha Nang Hydropower plant in central Quang Ngai Province, signed a contract to sell electric power generated from Ha Nang Plant to Electricity of Viet Nam (EVN).

The contract made Thien Tan JSC the first private enterprise in the central province to sell electricity to EVN.

Under the contract, EVN will buy electricity from Ha Nang Hydropower Plant for VND2,300 per kWh during peak hours. For the remaining hours of the day, electricity will be sold for VND560 per kWh, according to Huynh Kim Lap, director of Thien Tan JSC.

Lap said Quang Ngai-based company had invested VND330 billion (US$16.5 million) in the 11MW hydro-power plant, which was built in Tra Thuy Commune, Tra Bong District.

MSD Viet Nam opens office in HCM City

MSD Viet Nam Pharmaceutical Co opened a new office in HCM City on Thursday to strengthen its business strategies in Viet Nam.

The company would focus on launching new brands in diabetes treatment, along with cardio-vascular, infectious diseases, asthma, cervical cancer, women's health and vaccines.

MSD Viet Nam Co is a representative office of Merck Sharp&Dohme (Asia) Ltd, which is a global research-driven pharmaceutical company discovering, developing, manufacturing and marketing a broad range of health products and services.

Software firm profit up by 20%

HCM City-listed software producer FPT Company announced its after-tax profit of VND1.7 trillion (US$81 million) in 2010, a year-on-year increase of 20 per cent. The growing profit allowed the company an earning-per-share of VND6,598.

The company saw turnover of VND20.5 trillion ($976.2 million) last year, an increase of 9.5 per cent over 2009. Earnings from software production were VND3.2 trillion ($152.3 million) and VND2.5 trillion ($119 million) from telecommunication.

For 2011, the company has scheduled revenue of VND24.5 trillion ($1.26 billion), growth of 20 per cent and a profit of VND2.4 trillion ($114.3 million).

Cavico affiliate tips public offering

Cavico Industry and Minerals Co (HNX: CMI) announced a public offering of 16.6 million shares to raise a capital of VND203 billion (US$9.7 million) for its production projects.

The company will offer 11.4 million shares to existing shareholders at a ratio of 1:2. The shares will be sold at VND11,900 each. Another 285,000 shares will be sold to employees at the same price and the remaining 4.9 million shares will go to strategic partners at VND13,000 apiece.

Cavico Co announced that the closing for this registration to buy shares will be on February 10.

Timber producer to issue bonds

Timber producer Duc Long Gia Lai Corp (VSE: DLG) received the State Securities Commission's approval to issue 2.1 million convertible bonds to existing shareholders. The issue will be implemented at a ratio of 3:0.22.

The two-year bond has a coupon of 13 per cent a year. After two years, the bond will be converted into shares at a 1:10 rate.

The company expects to raise VND213.4 billion (US$10.2 million) from this issuance, which will be allocated to its working capital. Duc Long Gia Lai now has a charter capital of VND291 billion ($13.9 million).

Work starts on hydro-electric power plant in central Viet Nam

Viet Nam Oil and Gas Group (PetroVietnam) and Dakdrinh Hydro-Power JSC started the construction of the Dadrinh Hydro-power Plant in Quang Ngai Province yesterday.

Located in Son Tay District's Son Dung Commune and Kon Tum Province's KongPlong District on the Tra Khuc River, the 125MW will be the biggest hydro-power plant in Central Viet Nam.

The first turbine is scheduled to go into operation in September 2013 and the second in December of the same year.

Total investment for the project amounts to VND3,423 billion (US$170 million).

Dakdrinh Hydro-Power JSC was established in March 2007 by PetroVietnam, the Bank for Investment and Development of Viet Nam, the Infrastructure Construction and Development Corporation and the Song Da Corporation.

According to Dadrinh Hydro-power JSC, when construction is completed, the hydro-power plant will supply electricity to the national grid and water to the lower section of the Tra Khuc basin in the dry season, while controlling flooding in the rainy season. It would also act as a clean water resource for the Dung Quat Economic Zone.

Nguyen Xuan Hue, chairman of Quang Ngai's People Committee, said the project would contribute significantly to the economic development of the provinces of Quang Ngai and Kon Tum.

Solar giant's factory plan for City gets thumbs-up

The largest US-based manufacturer of solar panels, First Solar, was yesterday granted an investment licence for its US$1 billion project to build a factory in HCM City.

The plant will be built in Dong Nam Industrial Zone in Cu Chi District and produce thin-film solar modules. The company hopes the facility, together with similar facilities worldwide, will generate 2.7GW of energy a year.

Tymen DeJong, First Solar deputy director in charge of global production, said the first phase of construction work would kick off on Monday. The plant is expected to be operational by the middle of next year.

During the first phase, the plant will operate four manufacturing lines capable of producing an annual total capacity of 238MW. The capacity is expected to quadruple during the next phase.

Chairman of the municipal People's Committee Le Hoang Quan said the project was important to the rapidly urbanising city and would allow for large-scale economic development.

It is the biggest foreign-invested project in the high-tech sector to be launched in HCM City in 2010.

Reservoirs opened for drought-hit farmers

Power companies in northern Viet Nam have agreed to release valuable water from storage reservoirs to help farmers overcome severe drought.

Deputy general director of Electricity of Viet Nam (EVN) Dang Hoang An said on Monday afternoon that the company had complied with a request from the Ministry of Agriculture and Rural Development (MARD) to make two releases of water from its reservoirs at the end of this month and in February to save crops.

Deputy director of MARD's Irrigation Department Dang Duy Hien said that the survival of two-thirds of the rice crop under plantation in the north and north centre of the nation depended on water from the reservoirs.

Hien said that local farmers would have to give top priority to receiving "these golden water releases" even though the first one ended on New Year's Eve [Lunar New Year]".

About 2.7 billion cu.m of water, equivalent to 500 million kWh of electricity, from Hoa Binh, Thac Ba and Tuyen Quang electricity reservoirs, the biggest in the north, will be used to irrigate more than 635,000ha of crops.

This is much less than previous years. In early 2010, for instance, about 3.2 billion cubic metres of water was released for farming.

An EVN deputy general director, said the shortage of water in the north and north-central Viet Nam made it difficult for both agriculture and electricity to maintain operations.

An said after the two releases, the water level in the three major electricity reservoirs would be so low, therefore, no further releases could be made until rains topped them up again.

Hien said that reservoirs used solely for irrigation were also facing a severe shortage of water.

Therefore, local farmers must make good use of the two releases from reservoirs built to provide power, he said.

The National Centre for Hydro-meteorology Forecasting said water levels in the main northern reservoirs were now lower than average as the region had almost no rain since last October. No further rains are expected until the end of April.

Meanwhile, EVN has said it is committed to ensuring a Tet without blackouts despite the difficulties the company is facing due to the drought. More than one-third of power production in Viet Nam is hydro-power.

Exorbitant bank interest dampens realty buyers

Lending interest rates of up to 20 percent a year have been scaring away investors from the realty market, industry professionals say.

Lenders like Vietcombank, Vietinbank, HSBC, ACB, and others currently provide long-term loans of up to 70 percent of a property’s value for potential buyers but few have any interest.

Most of the buyers now can afford 50-70 percent of a property’s price and only talk to banks as a last resort.

Only ten percent of those who bought apartments distributed by Savills Vietnam get their finance from bank loans, Matthew Powell, the UK-based property consulting firm’s head of agency – Hanoi, said.

Hoang Anh Hung, an investor said it was previously very easy to earn high returns from investment in the real estate market by taking out bank loans.

But now a high interest rate backed by insufficient liquidity makes it extremely risky for secondary investors to obtain loans for property purchase.

It has restricted the flow of capital into the realty market, insisted Richard Leech, executive director of US-based real estate services firm CB Richard Ellis.

Bank loans are one of the main financial sources for buyers so they will be very hesitant if interest rates run so high, according to US-based commercial real estate services organization Colliers International.

Dr Dinh The Hien, a finance analyst, also agrees, remarking that an apartment is a big asset and, at these current rates, it would be hard for borrowers to settle the interest alone, let alone the principal.

Buyers can only afford to obtain loans at 8-10 percent interest, he added.

Recent reports by real estate companies show that very few property units have been sold lately.

PV