Bourbon leaves Vietnam

From Paris where the Bourbon group is listed with the code of GBB, the Dow Jones Newswires on November 18 announced that Bourbon Tay Ninh Joint Stock Co (HOSE-coded SBT) officially sold out its remaining 68.75 percent stake in the venture to Vietnamese partner for 34 million euro.

Local newswire Thoi Bao Kinh Te Saigon newspaper also confirmed Bourbon transferred 97 million shares to its domestic partner Thanh Thanh Cong JSC and some other entities with a price of 10,000 dong per share.

After the transfer of Cora supermarket few years ago, this was the second sale of Bourbon in Vietnam, ending the foreign investor’s presence here after directly investing here during a decade and a half.

Particularly, Jaccar Holding, parent company of Bourbon remains in Vietnam and now it is investing indirectly in some foreign subfunds.

During the first 9 months of 2010, SBT reached 262.3 billion dong in aftertax profit, the highest profit it earned since being formed. A sudden rise (97 billion dong) in Q3 profit was for the company’s sugar output increasing by 26 percent and sugar prices up 45 percent.

It is assumed that SBT gains aftertax profit of 300 billion dong in the whole year (which is the minimum level because current sugar price is higher than in Q3), charter capital of 1.419 trillion dong, its EPS will reach over 2,000 dong along with the share purchase price equaling to face value, P/E ratio may be 5 times. By that time, investors will be attracted to pour capital in shares of so-called essential commodities. The estimated price of 10,000 dong per share will be 20 percent lower than SBT’s trading price of 12,000 dong/share on November 26.

The quiet stock market is a chance for such a big transaction. Actually, Thanh Thanh Cong became a big shareholder of SBT three years ago as Bourbon Tay Ninh carried out equitisation and changed operation formed from 100 percent foreign-invested company to a joint stock firm. Two companies set a close partnership and became one of product dealers for Bourbon. Thus, it is reasonable as Thanh Thanh Cong decided to buy back the foreign partner’s stake in the joint venture.

Bourbon is a well-known name of French enterprises. After a 15-year marketing process, they decided to invest in Vietnam. SBT was born in 1995 as a joint venture whose 70 percent of charter capital was held by French partner. In 2000, the foreigner purchased entire stake of Vietnamese side and Bourbon Tay Ninh was transformed into a wholly-foreign invested business.

With the lasting support of French Development Agency (AFD) by providing loans at 4.62 percent a year, Bourbon Tay Ninh launched a theoretical investment for sugarcane plantation area and supporting farmers. They, even, raised its investment capital in Vietnam to $113 million in February 2001. By that year end, Ministry of Planning and Investment approved the annual CIT cut to 10 percent for the validity of the project.

But then till 2003, the sugar and sugarcane market was gloomy so most sugar refineries had to suffer big losses, material shortage and standstill in production. Bourbon Tay Ninh was also among the losers. Manufacturing capacity of SBT at that time was only 50-60 percent of the designed capacity while domestic price of sugar plummeted because of smuggled sugar. In 2005, SBT started to make profits as reaching the aftertax profit of 121 billion dong, then 192.5 billion dong in 2006, 191.3 billion dong in 2007 and 210 billion dong in 2009.

In 2007, SBT was privatised by selling 31.48 percent to strategic institutions including many foreign funds and consumers such as Vinamilk and Kinh Do JSC with a selling price of 25,000 dong per share. By late February 2008, SBT officially went on the stock market and its 44.8 million shares were put into transactions. Since then, the share has never surpassed the winning auction price of 25,000 dong/unit. Through nearly four years, the highest trading price of SBT was 22,800 dong on February 26, 2008 and lowest at 5,300 dong/share on February 27, 2009.

In the statement posted on the website of Hochiminh Stock Exchange (HOSE) on November 26, SBT said the leave of French partner was aimed to restructure and focus on supplying maritime services for offshore petroleum under the requirement of the Paris-based Jaccar Holding.

Behind the goodbye-saying of Bourbon may be the erosion of foreigners’ patience in waiting for any break-even or high profit from sugar investment in Vietnam after 15 years. Whether will Bourbon come back? – Vietbiz24

Tags: Bourbon Vietnam