By Hai Ly
Typical examples of the recent M&A deals includes BJC taking over Metro for US$876 million; International Mondeles spending US$370 million acquiring a 80% stake in Kinh Do; Power Buy buying a 49% stake in Nguyen Kim; and Metro Pacific spending US$90 million purchasing a large proportion of shares in HCMC Infrastructure Investment JSC (CII). In the future, there will be more investment opportunities as multiple businesses are now preparing for their initial public offerings or sale of state capital through public auctions, such as Saigontourist, Vissan, Satra, SABECO, MobiFone, ACV, PetroVietnam Power Corporation and Ben Thanh Corporation.
Vietnam is in need of capital for certain areas such as energy development, traffic infrastructure, real estate and essential consumer goods. These needs are associated with the efforts to improve the business environment through the renewal of the Investment Law, the Enterprise Law, the Bankruptcy Law and the Land Law, the participation in the Trans-Pacific Partnership Agreement (TPP) and the European Union-Vietnam Free Trade Agreement (EVFTA). Nguyen Xuan Thanh from the Fulbright Economics Teaching Program updated investors on the latest economic data for the first quarter of 2015 with GDP growth of 6.03%, inflation of 0.9%, export rise of 8.4% and industrial production increase of 9.1%.
Giving additional information for the first quarter, Ralf Matthaes, managing director of Infocus Mekong, remarked that some positive signals could not be ignored, including the warming of the real estate market and the jump in sales of automakers and distributors.
However, Ralf Matthaes also noted that the fast-moving consumer goods (FMCG) sector is faced with a decline in growth rate, regarding the value and volume of consumption in urban areas. For example, while the value growth was 10.3% in 2013, it dropped to 5.3% in 2014. Meanwhile, consumption in rural markets keeps its upward trend and helps manufacturers expand the scale of consumption.
Furthermore, consumer behavior is changing. For the first time ever, the growth in sales of a modern channel like supermarkets last year gave way to the growth of the traditional model, namely traditional markets and grocery stores. “Consumers are paying more attention to their spending and commodity prices. They tend to buy goods at traditional markets and grocery stores where the price is cheaper than supermarkets for the same product,” said Matthaes.
Currently, the majority of investment funds which were founded in Vietnam or in neighboring countries yet investing in Vietnam have disbursed more or less in essential consumer goods.
Albizia Capital, a Singapore’s US$500-million investment fund, has disbursed 10% of its capital mainly in Vinamilk and Kinh Do. Vo Van Linh, the fund’s representative, said consumer goods are highly appreciated due to their stable growth.
The consumer trend has expanded to electronic products such as mobile phones, tablets and laptops. According to Henry Nguyen, managing general partner of IDG Venture Vietnam, given the 43% of Vietnam’s population using the Internet and one in three possessing a handset, the future of online shopping is mostly bright, especially when the middle income class—those who earn a monthly salary ranging between VND13.5-20 million and over VND20 million—is rapidly rising.
Vietnam’s realty market is waiting patiently for foreign investment. Marc Townsend, CBRE managing director, said state capital is being poured into infrastructure projects, such as metro lines in HCMC, Thu Thiem 2 Bridge and Long Thanh-Dau Giay Expressway, which may lead to better sale of apartment projects. CBRE’s price breakdown of the costs of projects shows that the prices are way lower than those quoted a few years ago. Also, CBRE quoted a study which surveyed 2,000 customers of Nam Long, an estate developer in HCMC, which indicates that 66% of the respondents want to buy houses for permanent residence, over 80% wants a house in the next three years, and 81% want to get bank loans for their accommodations.
Another concern of foreign investors is whether they may face any challenge in market approach. Fred Burke from Baker & McKenzie listed protectionism, the performance of the state sector, corruption, the slowdown of Chinese economy and the increase in labor costs as one of the possible challenges.
During break time, an investment fund which originally operated in the insurance sector said another challenge should be included. It is market opening and tariff removal in accordance with the bilateral and multilateral agreements Vietnam has signed, which may put the competitiveness of many listed companies to a test. Falling prices of agricultural items on the world market, such as rice and natural rubber, and of raw materials and energy, like crude oil, copper and iron ore, have both positive and negative effects on export and import.
AWR Lloyd, an international consultancy firm, presented a profound and in-depth analysis of the local oil and gas industry—from growth in oil product consumption in comparison with regional countries to the key players on the market. Vietnam is desperately in need of investment in not only oil prospecting and exploration but also infrastructure which connects gas wells with complexes such as fertilizer, chemical and power plants—particularly, oil refinery projects requiring long-term investment.
AWR Lloyd saved an entire section for analyses on oil and gas companies listed on both bourses where high scores were given to such firms as GAS, Phu My Fertilizer, Petrolimex Petrochemical Corporation (PLC), Petrolimex Gas (PGC), and Saigon Fuel Joint Stock Company (SFC).
Up to 25 listed and unlisted companies in various sectors made contact with investors at Vietnam Access Day. It’s still hard to ascertain whether a specific enterprise has concluded a deal considering such a huge volume of macro- and micro-economic information disseminated at the event by speakers and business people alike. Aside from necessary figures, investment promotion involves the entire process of attracting foreign capital to the domestic market. It is this reason that events similar to VCSC’s Vietnam Access Day should be heartily supported.
Đăng ký: VietNam News