Public share purchase offerings break out

A lot of listed companies now are asking to purchase each other’s shares on the official stock market whereby this company can become a member in other’s director board for administration.

Director boards’ meeting report of An Giang Fisheries Export Import Joint Stock Co (AGF) on January 15 announced that Hung Vuong Joint Stock Co (HVG) asked to buy 3.75 million AGF coded shares aiming to create the uniformity in the distribution market share and bring interests for both sides.

HVG’s Chief Executive Officer Duong Ngoc Minh said that the public share purchase will help two companies take each other’s available advantages in export markets, fish raising, material sources, equipments and facilities.

Not similar to the trading between HVG and AGF, the deal that Phu Nhuan Jewellery JSC wanted to raise its size in Saigon Fuel Joint Stock Co (SFC) to 26 percent carries the different purpose. PNJ plays as the big shareholder of Dong A (Eastern Asia) Commercial JS Bank, a capital provider and SFC specialises in petroleum and real estate business demanding high capital. So the business cooperation will help SFC expand the petroleum distribution network in HCM City and neighbouring provinces, and invest in property market.

According to a financier, thanks to the consultancy of stock brokerages, sellers are very intelligent in offering a price of no less than market level, typically HVG asked to purchase AGF coded shares at 36,000 dong/share while the market price at that time was 33,500 dong per share. Similarly, PNJ offered the price of 48,000 dong per SFC coded share while SFC saw the ceiling rise in prices to 50,000 dong per unit.

Public share purchase offerings were not new in Vietnam. Previously, Kinh Do Co had bought into Saigon Brewery Co (Tribeco) and Vinabico. Also, Korean group Lottee purchased 30 percent into Bien Hoa Confectionery JSC (Bibica) in 2007 whereby Lotte helped Bibica gain advantages in producing medium and high class products. Ending 2009, Bibica earned the after-tã profit of 58 billion dong, increasing by over two fold against 2008′s 21 billion dong, and reached the profitability ratio of 9.2 percent (higher 3.8 percent of 2008 and 5.4 percent of 2007).

But not all deals of public share purchase offerings are smooth. Phan Minh Co, former general director of Tribeco expressed happiness as he heard about the purchase offering of Kinh Do Co in his firm in 2005 and said that the deal could open further cooperation. Kinh Do invested in Tribeco not for earning profit from stock business. Kinh Do wanted to combine with Tribeco to develop the brewery production and share risks. Two years later, Tribeco welcomed another foreign strategic shareholder Uni-President. But in 2008 and 2009, Tribeco continuously reported losses and its share price fell to 6,300 dong/share.

Since two shareholders Kinh Do and Uni-President bought into Tribeco, the brewer’s director board changed two general directors. According to the latest announcement of Tribeco, the following loss in 2009 (unaudited report) is unavoidable because the company had to re-build the sales and marketing system and treat all remaining problems of previous years.

Tags: vietnam securities, Vietnam stock market, Vietnam stock news

Posted by VBN on Mar 9 2010. Filed under Stock. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry