VietNamNet Bridge – A question has been raised on how the SCIC’s fate would be if one day, it has to abandon Vinamilk shares?


Though SCIC has reported a brilliant success in business results in 2012, economists still can see high risks the super corporation is facing.

By December 31, 2012, SCIC had invested capital in 400 enterprises with the book value of VND14 trillion and the market value of VND50 trillion.

The corporation invests in three main groups of enterprises. The first one is the strategic group which comprises of 10 listing shares with the highest market value such as Vinamilk (in which SCIC holds more than 45 percent of total stakes), Vinaconex, an import-export and construction corporation (58 percent), Hau Giang Pharmacy (43 percent), Vinare, the national re-insurer (40 percent) Bao Minh insurer (51 percent).

The second one is the “flexible group,” which means that SCIC would make investment decisions flexibly at different moments. The third one is the group of enterprises from which SCIC plans to withdraw capital.

The first group, led by Vinamilk, is clearly the “money earning machine” for SCIC. 80 percent of SCIC’s total investment value has been poured into the enterprises which bring more than 60 percent of post tax profit to the corporation.

Meanwhile, the third group, comprising of 254 enterprises, is the worst in the eyes of SCIC. However, SCIC, though really wanting to quit the enterprises, still cannot fulfill its plan.

The economic recession has made the stakes of the companies, mostly in the real estate sector, become less attractive in the eyes of investors.

“Real estate has become a nightmare for all investors,” a high ranking executive of SCIC said, explaining why SCIC still cannot withdraw capital from the real estate firms.

Also according to the executive, the biggest obstacle for SCIC now is the regulation that SCIC must not sell the state’s shares at the value lower than the book value, except the enterprises which take profits for the last three consecutive years.

He said the regulation has put both SCIC and the invested enterprises in dilemma.

Many share items are now priced at just around VND5000-7000 per share on the Hanoi and HCM City bourses. Meanwhile, there are numerous shares having the market value lower than the book value. How can SCIC sell stakes if it insistently sets up overly high prices?

What’s the future for SCIC?

Analysts believe that SCIC surely does not want to leave Vinamilk, which has been bringing fat profit to the corporation, even though if it shifts to operate under a new mechanism.

Meanwhile, Vinamilk, which has set up an ambitious of obtaining the revenue of $3 billion by 2017, it would surely think of selling more stakes to foreign investors.

However, since the amount of shares being held by foreign investors has hit the ceiling level, the only way Vinamilk has to follow to obtain its purpose is to reduce the ownership ratio of other shareholders. If so, the 45 percent ownership ratio by SCIC would be put into consideration.

SCIC is believed to have the same operation model as Singaporean Temasek, which are both the national investment funds. However, the future of SCIC may be different from Temasek.

The basic difference between SCIC and Temasek is, according to economist Le Hong Giang, is that Temasek is highly transparent and professional.

According to Edward Truman, a researcher, the transparency index of Temasek ranks the second in Asia. It voluntarily releases the finance report annually, though it doesn’t have to, because it is not a public company.