Vietnam’s biggest dairy products company is set to become the first company from the country to list overseas by floating 5 per cent of its shares on the Singapore stock exchange by the end of the year.
Vinamilk, the second-largest firm listed on the Ho Chi Minh City Stock Exchange, said it would offer 8.85m new shares in Singapore but did not say how much money it expected to raise. Mai Kieu Lien, chief executive, said the overseas listing must be approved at a shareholders’ meeting on March 31. With the company 50.1 per cent state-owned, Hanoi should not face any practical obstacle to proceeding.
However, some investors warned the move could prove detrimental to the seven-year-old local market, especially if other companies follow suit. “I don’t think it’s a positive for the company or the development of the domestic market,” said John Shrimpton, a director at Dragon Capital, a boutique Ho Chi Minh City-based investment bank.
It remains to be seen whether Singaporean investors will be as enthusiastic about the company as investors at home. Vinamilk is trading on the domestic stock exchange at a price-to-earnings ratio of 43 times 2006 earnings, and 32 times projected 2007 earnings. Vietnam’s stock market rose 144 per cent in 2006 and is up another 50 per cent this year, triggering a frenzy for stocks that has alarmed the communist authorities.
After watching those gains, Vietnam’s emerging middle class is in the throws of stock market mania and students, civil servants and state enterprise managers with cash to spare are all rushing to buy shares and dreaming of windfall profits.
