VietNamNet Bridge – A number of equitized state-owned enterprises’ (SOEs) initial public offerings (IPOs) will take place in the last months of the year.

Stock investors have complained that they have not had many investment choices because of the lack of goods in the market. However, they will not complain anymore as many IPOs are scheduled to be launched in the time to come.

The national flag air carrier Vietnam Airlines last week successfully held its IPO, selling 49.36 million shares, or 3.5 percent of its chartered capital. Two Vietnamese banks alone registered to buy 98.6 percent of the shares offered.

It is expected that 18 equitized SOEs will have IPOs in the last two months of the year, at which 268.6 million shares will be available. These include 129 million shares of the Ca Mau Fertilizer Company offered for sale at the starting price of VND12,000 per share, and 61 million shares of Seaprodex, a seafood company, at the starting price of VND10,000 per share.

Analysts doubt that the IPOs will attract investors once they take place within a short time. Some of them even compared the IPOs to the trade companies’ year-end big sale campaigns.

Dr. Bui Kien Thanh, a renowned economist, is sure that the IPOs will not be satisfactory because too many IPOs are taking place at a time when the market demand is weak.

Meanwhile, some analysts commented that SOEs were hurrying to launch IPOs to fulfill the equitization plans they have submitted to the government.

The government, in an effort to speed up SOE equitization, has decided that the enterprises that cannot hold IPOs in the immediate time will still shift into joint stock companies, in which the State will hold controlling stakes. The other shareholders could be the companies’ workers, strategic partners or the State Capital Investment Corporation (SCIC).

A government report showed that by April 2014, the total assets of the state owned general corporation and economic groups had increased VND2,393 trillion, or 318 percent, from VND751 trillion in 2006.

However, analysts pointed out that the increase in the total assets is not enough to make the corporations’ shares more attractive in the eyes of investors.

“In general, farmers will have to fatten their buffaloes before selling buffaloes at the market. Meanwhile, many enterprises are still in bad condition, which will surely not attract investors,” an analyst said.

While the enterprises’ total assets have increased, the total accounts payable have also risen rapidly, from VND420 trillion, or 1.32 times of the enterprises’ stockholder equities, to VND1,349 trillion in 2012.

Many SOEs’ IPOs have failed recently. Cienco 5, the transport infrastructure developer, for example, offered to sell 14.2 million shares, but only 1.8 million shares were sold.

The other five enterprises, belonging to the Ministry of Construction, faced the same problem. Cienco 6 could sell only six percent of the shares offered, while 27.5 million shares have been left unsold.

Dr. Tran Dinh Thien, head of the Vietnam Economics Institute, commented that the modest profit made by the enterprises was the main reason behind the investors’ indifference to the IPOs.

Cienco 5, for example, which has chartered capital of VND495 billion, made a modest profit of VND5.2 billion in 2012.

DNSG