Vietnam Airlines will list some 1.23 billion shares, which is priced at 28,000 dong each. Vinatex will list 500 million shares sold at 13,500 dong apiece, according to documents released by Hanoi stock exchange, which operates UPCoM. Vietnam allows companies that do not meet requirements to list on the main bourses to trade some shares on UPCoM, ahead of expected public offerings of bigger stakes later on.
Vietnam Airlines expects to reduce state ownership to 75%, then 65% from the current 86.16%, following its restructuring plan. The carrier is valued at around $1.53 billion.
Despite booming tourism, Vietnam Airlines faces challenges. The country's under-developed infrastructure has caused congestion at the airports. The Civil Aviation Authority of Vietnam recently asked local airlines to consider moving their aircraft to Can Tho airport, about 170 kilometers from Ho Chi Minh City, and parking them there overnight.
This is because the economy hub's Tan Son Nhat Airport, the country's biggest and busiest airport, is unable to cope with the growing traffic. Between 2011 and 2016, passengers and cargo grew at an average of 15.8% and 13.6% annually. The country's airports are expected to receive 49 million passengers and 902,000 tons of cargo in 2016, a 26% and 7.9% year-on-year growth, respectively.
Furthermore, Vietnam Airlines is facing intensifying competition. Local low-cost carrier Vietjet Air surpassed Vietnam Airlines to secure 43% of domestic seat capacity in the first quarter of 2016.
Vietjet Air is set to list its shares on Ho Chi Minh City stock exchange in the first quarter of 2017. It has held a closed meeting with potential investors mid-December, and reportedly sold more than 44 million shares, or a 15% stake to institutional investors at the price of 84,600 dong. It is selling another 3.5 million shares to individual investors at the price of 86,500 dong each.
Vietnam Airlines forecast that revenue will reach 76 trillion dong in 2016, meeting 95.5% of its full year target. Its pretax profit is expected to hit 2.4 trillion dong, 0.7% higher than its target for the year.
Meanwhile,Vietnam National Textile and Garment Group, known asVinatex, sold some shares in 2014 at an average price of 11,000 dong each. The state currently holds 54% of the group, while Vingroup and Vietnam Investment Development Group holds another 24%.
Vinatex is set to make its debut on UPCoM amid headwinds. Vietnam's textile and garment sector was supposed to be a major beneficiary of the Trans-Pacific Partnership. However, the trade pact is effectively dead as U.S. President-elect Donald Trump has pledged not to ratify it when he takes office.
According to the latest data, Vietnam's real domestic product in 2016 grew 6.21%, slightly missing the 6.3% government projection released in September and the 6.7% initial forecast made at the start of the year. The export-led economy looks like it will miss the 10% growth target for this year, as total export value in January-November reached just $159.9 billion, representing a 7.8% year-on-year increase.
The Vietnamese textile industry is also facing tougher competition as Bangladesh, Cambodia and Laos are aggressively expanding their businesses into the European Union and the U.S. on the back of export tax incentives.
Vinatex, the largest textile company in Vietnam, contributes 15% of the country's total garment and textile export value. It forecast on Monday a revenue of 40.5 trillion dong, up 3% year-on-year in 2016. It also reported a pre-tax profit of 1.43 trillion dong, up 9%. Revenue and profit growth have slowed from 14.3% and 18.2% respectively a year ago.