VietNamNet Bridge – Though many state-owned enterprises (SOEs) are unprofitable, investors still see them as attractive, thanks to their advantages in business fields and large land funds.

All 120 million shares that the SOE Vinatex planned to sell to strategic shareholders, for instance, have been sold to two private enterprises, Vingroup and VID Group. The decision by the two investors show that SOEs are attractive, despite their lackluster business performance.

A senior executive of a securities company noted that the main advantage of Vinatex is the 500,000 sq m of land the textile and garment group owns. As Vietnamese say, “land is gold”.

Vingroup, owned by Pham Nhat Vuong, the Vietnamese dollar billionaire listed by Forbes, has succeeded in developing two urban areas in Hanoi, Times City and Royal City, built on sites of the former Mechanical Engineering Factory No 1, the 8/3 Textile Factory and Hanosimex.

And analysts believe that Johnathan Hanh Nguyen, a well-known businessman, invested in SASCO, the Tan Son Nhat Airport Air Service Company, for the same reason. The company’s large land fund in an advantageous position is highly desirable.

In the past, the equitization of Intimex, Trang Tien Ice Cream, Phu Gia Hotel and  Ho Tay Crisp Shrimp Pastry Companies once stirred up the public because the companies owned a series of “golden land plots” in central Hanoi.

Opportunities await

The SOE equitization process, however, has been going very slowly, despite modest improvement recently. A report said 71 SOEs were equitized in the first nine months of the year. Meanwhile, Vietnam planned to complete the equitization of 432 SOEs in 2014-2015.

Also, according to the report, state-owned economic groups and general corporations invested VND21 trillion in non-core business fields and they now are trying to withdraw investment capital as requested by the government. To date, only 20 percent of the plan has been fulfilled.

Analysts said the figures showed that there would be many opportunities for investors to inject money into SOEs, and at “reasonable prices”.

The government, in an effort to accelerate the equitization process, has released Decision 51 which stipulates that SOEs can be sold at prices lower than the book value.

Investors recently have paid special attention to the equitization of the Vietnam Railway Corporation (VNR), which has been described as a “dog-tired” enterprise put under the management of the Ministry of Transport.

However, VNR is a promising investment in the eyes of investors, because the enterprise has land plots in many localities, from the north to the south.

Though the real estate market remains sluggish, VNR still has called for strategic investors to contribute capital so that it can set up joint-stock companies to develop railway services and do business with its large land fund.

Manh Ha