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BUSINESS IN BRIEF 26/12   2010-12-26 - Viet Nam Net

Property firms need more cash to operate

 

The Ministry of Construction plans to raise the legal capital requirement of real estate companies to ensure they are viable and operate transparently, says Deputy Minister Nguyen Tran Nam.

 

The law currently required property developers to have minimum legal capital of VND6 billion (US$300,000), Nam said, adding that real estate firms with limited resources might not be able to meet their business obligations.

 

The Government is consulting with property developers to determine what their capital needs are likely to be before setting a minimum legal requirement.

 

Dang Hung Vo, former deputy minister of the Ministry of Natural Resources and Environment, said the new regulation would deter ailing companies from joining the real estate sector. However, he said it would be difficult to determine just how much capital a real estate firm would need to be viable.

 

But Pham Thanh Hung, deputy general director of Century Real Estate Company, said raising the minimum capital requirement of real estate enterprises would reduce business opportunities for small firms and destabilise the market.

 

Viet Nam has about 2,500 active real estate projects, occupying an area of 80,000ha. Of those, 1,400 projects are in HCM City and 800 in Ha Noi, as of last October. Of those in the capital, 250 are awaiting Government approval.

 

OTC shares attract eye of institutional investors

 

Institutional investors are eyeing more unlisted stocks despite many OTC stocks seeing inactive trading.

 

According to Dau tu chung khoan (Securities Investment) newspaper, Ha Noi Building Bank has finalised the purchase of a 5-per-cent stake in Binh An Seafood Company.

 

The bank will help the company improve its corporate governance and develop its business strategy.

 

MBCapital's director of business development Truong Thi Huong Tra said that its subfund MP Japan Asia Fund was seeking opportunities with unlisted companies worth up to US$10-20 million. The companies also had to be financially transparent with a need to increase charter capital.

 

Tra said that the fund was currently in investment negotiations with a number of OTC companies.

 

She said many small and medium-sized enterprises had good track records but still faced difficulties in raising capital from investment funds or had trouble accessing banking loans.

 

Meanwhile, Dang Thi Minh Loan, deputy managing director of VinaCapital, told Dau tu chung khoan that the fund had about $20 to 50 million in cash and planned to give priority to investing in unlisted companies with proven potential for growth.

 

John Nolan, an HCM City-based management fund analyst, said that institutional investors were interested in unlisted firms because those companies' share prices were lower than their real value.

 

"I have found that many unlisted firms have a lot of potential which hasn't been exploited yet due to a shortage of capital," Nolan said.

 

At the same times, companies being traded in the OTC market weren't governed by the same strict disclosure rules. This made it difficult for investors to realise an unlisted company's potential without a lot of effort, he added.

 

"The opportunities from listed companies appear smaller," he said.

 

Do Doan Kien, representative of Aureos Capital – the founder of Aureos Southeast Asia Fund – said that Viet Nam was a developing country, which meant that the country's enterprises had a lot of potential.

 

Kien said that the fund was in negotiation with several local companies and their 5- to 7-year investment period could begin in the first quarter of next year.

 

Belgian firm to outfit fish oil refinery

 

Sao Mai Construction Corporation awarded a contract on Wednesday to Belgium-based Desmet Balesstra Co to provide equipment for a fish oil refinery in Vam Cong Industrial Park in the southern province of Dong Thap. Being built at an estimated cost of US$15 million, the plant is expected to produce 100-200 tonnes of refined fish oil per day for use in cosmestics, pharmaceuticals and foodstuffs when it begins operations later next year.

 

$14m to extend condensate refinery plant

 

The Petroleum Equipment Assembly and Metal Structure Co Ltd and the Petechim Joint Stock Co will join forces to enlarge the storage facilities of the natural gas condensate refinery at Cai Mep Industrial Park in the southern province of Ba Ria-Vung Tau. The work, at a cost of VND283 billion ($14 million), will add 45,700cu.m to the storage capacity, bringing total capacity to 76,700cu.m.

 

Brick-making facility starts operations

 

Viglacera Concrete Engineering Joint Stock Co yesterday launched its autoclaved aerated concrete (AAC) brick plant in the Yen Phong Industrial Zone in the northern province of Bac Ninh, following a fast-tracked six-month construction period.

 

The plant is expected to produce 130 million bricks per year, providing advanced construction materials in compliance with the Government's non-heated building materials programme begun in 2008.

 

K+ store offers satellite TV in Da Nang

 

The Viet Nam Satellite Digital Television (VSTV) officially opened a new K+ store in the central city of Da Nang this week. The availability of the K+ satellite network in the central region will give viewers in the central region access to over 70 channels of SDtelevision and eight with HD television. VSTV is a joint venture of Viet Nam Cable Television and Canal Overseas, making it the first international broadcasting joint venture in the country.

 

HAGL sells shares to Deutsche Bank

 

Property developer Hoang Anh Gia Lai (HAG) will sell 16.2 million shares to Deutsche Bank Trust Co Americas and nearly 2.8 million shares to Saigon Securities Co (SSI) this month. HAG had initially planned to sell all of 19 million shares to Deutsche Bank at a price of VND72,000 (US$3.60), but the bank registered to buy only the reduced figure. The remaining shares will therefore be sold to SSI at the same price.

 

In August, HAG issued VND1.1 trillion ($56.4 million) worth of convertible bonds to Northbrooks Investment (Mauritius) Pte Ltd, a unit of Singapore's Temasek Holdings.

 

Bond liquidity gets a boost

 

The time from initial bond issue to listing on the Ha Noi Stock Exchange shorted from 13 to six days, under an agreement signed on Tuesday among the exchange, the Viet Nam Securities Depository and the State Treasury. The change will take effect on January 1.

 

Under the agreement, the time to close the list of investors to receive principal or interest payments will also be shortened from 10 to six days, effective July 22.

 

Eximbank, Sieu Thanh pay cash

 

Eximbank (EIB) has set December 31 as the deadline for shareholders to register for the bank's 12-per-cent cash dividend payout on January 18. Shareholders of electronics supplier Sieu Thanh Co (ST8) also have until next Friday to register for the company's planned 10-per-cent cash dividend on January 18.

 

Shipping firm beats forecasts

 

The Viet Nam Ocean Shipping Co (VOS) expects to post a profit of VND170 billion (US$8.5 million) for the year, an increase of 50 per cent over the company's target for the year, which it had met by the end of November. Earnings for the first 11 months of the year totalled VND2.62 trillion ($131.2 million), a figure expected to rise to VND2.86 trillion ($143 million) by year's end.

 

PetroVietnam affiliate to list

 

Petroleum Gas City Investment and Development Co, a member of the PetroVietnam Group, has received in-principle approval to list nearly 18.9 million shares on the Ha Noi Stock Exchange. The company currently has a charter capital of VND189 billion (US$9.5 million), of which 44 per cent is held by foreign investors.

 

The company earned VND139.2 billion ($7 million) last year and posted a profit of VND10 billion ($500,000). This year, it targets earnings of VND338 ($16.9 million) and a net profit of VND7 billion ($350,000), on which it plans to pay a 3.87-per-cent dividend.

 

Bao Viet Bank told to halt IPO

 

Bao Viet Commercial Bank has halted plans to issue additional shares, under order from the State Securities Commission. The VND3 trillion (US$150 million) had been intended to help the bank meet higher minimum capital requirements, since delayed for one year by the Government. The commission asked the bank to halt the issue and complete preparation of its audited financial statements for 2010 before re-registering for the issue.

 

Consumer price index reaches 9.19 per cent

 

The Consumer Price Index (CPI) for the entire year is likely to remain in single digits, at 9.19 per cent, the General Statistics Office announced this morning.

 

However, the annual CPI rate was still two percentage points higher than the initial target of 7 per cent set by the National Assembly at the beginning of the year.

 

December's CPI increased 1.98 per cent against November this year, with food witnessing the highest increase at 4.67 per cent, followed by foodstuffs 3.28 per cent, and housing and construction materials 2.53 per cent.

 

Textiles, garments and shoes posted a 1.81 per cent increase. Household goods and appliances rose 0.86 per cent. Medical and healthcare services increased 0.41 per cent, transportation costs increased 0.45 per cent and educational products and services rose just 0.07 per cent.

 

Only posts and telecommunications registered a slight decrease of 0.02 per cent.

 

The gold price jumped 5.43 per cent against November or 30 per cent up on December 2009.

 

The cost of the US dollar was up 2.86 per cent against previous month and 9.68 per cent against December 2009.



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