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Stock market warming up, businesses moving ahead with IPOs
As the stock market has warmed up recently, a lot of businesses have re-introduced plans on making initial public offering (IPO). However, despite the warm stock market, many IPOs remain unsuccessful.
The Khanh Hoa Mineral Exploiting Processing Export Company (Minexco Khanh Hoa) has made IPO, offering to sell 2.7mil shares at the Hanoi Securities Trading Centre. However, only 139,300 shares were sold at a price a little higher than the starting level. Only 40 investors registered to purchase Minexco Khanh Hoa’s shares, and there was no institutional investor.
Vinatrans, a freight forwarding company, offered to sell 12.7mil shares, but sold only 379,500 shares. In the case of Ba Ria-Vung Tau Construction and Urban Development Company, only one investor registered to join the IPO, which forced the cancellation of the IPO as it did not have enough registered investors.
One of the rare successful IPO cases in recent days was the IPO of Vietinbank Securities Company. More than 5,500 investors, both institutional and individual ones, joined the auction. The volume of shares investors registered to purchase was 39% higher than the offered volume. Vietinbank Securities Company sold all 19mil shares it offered.
The Thai Nguyen Cast Iron and Steel Corporation is planning to offer 25.6mil shares to the public in May with the starting price at VND10,100/share. The Hanoi Mechanical Electric Engineering Company also plans to put 8mil shares on sale in its IPO slated for May.
At the HCM City Stock Exchange, Mekonimex, specialising in farm produce exports, is also planning to make IPO. To date, 33 investors have registered to purchase 99,400 shares of the company.
In general, both the HCM City and Hanoi bourses have 10 IPOs in March and April, while there were only a few IPOs in the last months of 2008 and the first two months of 2009.
Vu Ngoc Lan, Deputy General Director of Pho Wall (Wall Street) Securities Company, said that the market’s performance in the last six weeks has prompted securities companies to restart plans on making IPOs. Some companies, which had not planned on IPOs previously, now are also considering IPO plans.
The success of Vietinbank Securities Company’s IPO has been explained not only by its good business prospects, but also good timing.
Lan said that Vietinbank Securities Company, which has experience in the stock market, set a good moment for its IPO, when conditions were favourable with investors confident in the market.
The director of a securities company said that economic information at this moment seems to be more favourable for IPOs. However, investors still think carefully before making any investment decision. Only good share items with reasonable prices will be purchased by investors. “Shares will be unsalable even if the share items are good, but have high prices,” he said.
Vietinbank Securities Company succeeded in its IPO, but the average IPO price was just a little higher (VND245/share) than the starting price, reaching VND10,455/share.
Prior to that, its parent bank Vietinbank sold all 53.6mil shares it put on offer, but the successful average IPO price was just VND20,265/share, higher only by VND265/share than the starting price.
VietNamNet, VNE
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