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Dairy company doubles value of Vietnam bourse
Amy Kaimin, FT Syndication Service
1/23/2006
BANGKOK: Vietnam's stock market more than doubled in value late last week -- pushing it past the $1.0bn mark -- when Vinamilk, the country's top dairy products company, was listed on the exchange.
The listing of Vinamilk, which had been traded on the unregulated, over-the-counter market, marks a milestone for Vietnam's five-and-half-year-old bourse, which still has just 34 listed companies and has been struggling to gain the attention of global investors.
Vinamilk's market debut comes as more international investors are looking to gain exposure to Vietnam's fast-growing economy, which expanded by more than 8.0 per cent last year.
"For the first time, international fund managers have access to a sizeable, listed and liquid stock in Vietnam," said Jonathon Waugh, director of PXP Vietnam Asset Management.
"As additional Vietnamese companies of equal or larger size follow suit, so the attraction of the Vietnamese stock market will increase in the eyes of foreign investors."
John Shrimpton, a director of Dragon Capital, said the listing would be a "major catalyst" for the market.
After a lacklustre first half, Vietnam's stock market rallied late in the year. In October, stock market regulators raised the foreign equity limit for listed companies from 30 to 49 per cent.
The move helped the market to finish the year up 27 per cent against the end of 2004.
In the year ahead, market participants expect other larger companies, including several banks, to be listed, though regulatory issues must still be sorted out since the current banking law limits foreign equity holdings in banks to just 30 per cent.
Vietnam's newest listed company, Vinamilk, is a state-owned enterprise turned publicly held company, which produces a range of dairy and food products including milk, yoghurt, ice cream, cheeses, baby formula and juices.
Vinamilk has just announced a joint venture with the international brewer SABMiller to enter Vietnam's crowded beer market, by establishing a factory that will produce half a million hectolitres of beer per year.
Vietnam's Communist government began selling off its stake in Vinamilk in late 2003, with the disposal of 4.0 per cent of its holdings.
In February last year, the state sold off an 11.5 per cent stake through a transparent Dutch auction, raising $36m (euro 29m, £20m).
In November, the state sold off a third tranche of its shares -- another 10 per cent of Vinamilk's total equity-raising $53m.
The government holding is now just over 51 per cent, the minimum required for a licence to operate such a large brewery.
In its recent debut session, Vinamilk shares rose 8.4 per cent from the average share price in last November's auction -- bringing the company's total implied market capitalisation to $531m.
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