Market looks for new sources of goods as divestment from state enterprises proceeds

The situation changed in a positive direction when the stock market and and stock prices went up. This will enable divestment from SOEs and the equitization process to take place more easily.

Market looks for new sources of goods as divestment from state enterprises proceeds

The Ministry of Finance has sent a document to the State Capital Investment Corporation (SCIC) requesting its divestment from Bao Viet Group, Bao Minh Corporation and Tien Phong Plastic Joint Stock Company under an approved plan. This is expected to be a source of new quality goods for the stock market.

Specifically, the SCIC is asked to divest from Baoviet Holdings, Bao Minh and Tien Phong Plastic before December 20th and transfer the proceeds from the divestment into the State budget.

Currently, SCIC is holding 22.15 million shares of Baoviet Holdings (2.98%), 55.44 million shares of Bao Minh (50.7%) and 43.7 million shares of Tien Phong Plastic (37%). At the current market prices, SCIC can earn about 6,350 billion VND from selling shares of these groups.

Hearing the news, the prices of insurance stocks such as BVH, BMI, PVI, MIG... and Tien Phong Plastic increased strongly.

In May 2021, SCIC announced a list of 88 state-owned enterprises that it would divest from in 2021, including many well-known names such as Sabeco, Song Da Corporation, Vinatex, Tien Phong Plastic, Binh Minh Plastics, FPT, Bao Minh Corporation, Bao Viet Group...

Meanwhile, the Vietnam Chemical Group (Vinachem) said that it had submitted to the State Capital Management Committee a project to restructure the group for the period of 2021 - 2025. Accordingly, Vinachem will divest its capital from many chemical companies in 2021, including Lam Thao Chemical (LAS), Viet Tri Chemical (HVT), Duc Giang Chemical (DGC);…

Currently, Vinachem is holding 15.14 million DGC shares of Duc Giang Chemical. With the current price of over 160,000 VND/share, Vinachem can earn more than 2.4 trillion VND.

In late 2019, Vinachem auctioned more than 11.45 million DGC shares at a starting price of 49,100 VND/share, but it only sold 200 shares with a total transaction value of less than 10 million VND.

However, the situation has changed. The Vietnam stock market is now very exciting, with trading sessions worth billions of US. The cash flow into the stock market is sustainable. A strong increase in share price is the premise for the divestment.

So far this year, the price for Duc Giang Chemical shares has soared, from 40,000 VND/share to 160,000 VND/share at present. At this price, Duc Giang Chemical has a market capitalization of nearly 25.8 trillion VND (equivalent to 1.1 billion USD) and is one of 56 companies with a market capitalization of billion USD on the stock exchange.

The chemical industry has enjoyed many advantages over the past year, while the insurance industry has also been attractive despite the pandemic. The construction materials industry, including steel and plastic, has thrived thanks to the record high selling prices of products.

Stocks rise, equitization slows down: opportunities are missed

Market looks for new sources of goods as divestment from state enterprises proceeds
 

In fact, divestment and equitization took place slowly in the first 3 quarters of the year, reaching just over VND 2 trillion due to many factors, including complicated developments of the Covid-19 epidemic. It is highly possible that budget revenue earned from equitization and divestment in 2021 will not reach the target of VND 40 trillion.

According to the Department of Corporate Finance of the Ministry of Finance, the equitization of State-owned enterprises in 2021 has been difficult because the enterprises have not yet completed legal procedures for restructuring and house and land handling before equitization l, according to regulations on rearrangement and handling of public property. There are many financial problems to be solved, plus the negative impact of the Covid-19 epidemic.

Many experts believe that the delay in equitization also comes from the behavior of leaders of many SOEs, who are afraid to make mistakes.

Dr. Nguyen Dinh Cung, former director of the Central Institute for Economic Management (CIEM), said for many years, the equitization and divestment of state-owned enterprises has been slow and impractical.

Most experts believe that the main reason for the delay in equitization is the complexity of legal procedures to deal with houses and land owned by these enterprises.

Market looks for new sources of goods as divestment from state enterprises proceeds

According to the Draft Scheme on SOE restructuring, in the coming time, direct administrative intervention mechanisms and policy subsidies for SOEs will be eliminated. The scheme is expected not only to speed up the process of reorganizing and renewing SOEs which has been slow for many years, but also will help increase the quality of enterprises after the arrangement.

The situation changed in a positive direction when the stock market and and stock prices went up. This will enable divestment from SOEs and the equitization process to take place more easily.

According to new regulations in Circular 180, for SOEs equitized in the form of an IPO, within 60 days from the date of receipt of the notification confirming the result of the IPO from the State Securities Commission, the enterprise must complete all procedures for securities registration at VSD and registration of transactions according to regulations.

Circular 180 has led to the equitization of many state-owned enterprises, which are listed on the UPCom floor, such as Vietnam Airlines, ACV, VEAM, Becamex (BCM), Viet Tien (VGG), Vinatex (VGT), and the Vietnam Rubber Group (GVR)…

According to VCBS, the stock market's positive movements in the recent time will help the plan to divest state capital in state-owned enterprises to proceed more smoothly in the coming time.

Luong Bang

State-invested enterprises: VND1.7 quadrillion in capital, tens of trillions of VND in losses

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