Song Da sets sights on 2019 IPO

Vietnam’s leading infrastructure company, Song Da Corp., has secured the Prime Minister’s approval to conduct an initial public offering (IPO) in 2019.

With registered capital of VND4.5 trillion (US$198.34 million), the corporation plans to sell a 30 per cent stake to strategic partners and 18.82 per cent to the public.

The government will lower its stake to 51 per cent by the end of 2019 and less than 50 per cent the following year.

The IPO price will be decided by the Minister of Construction, who will also set the criteria for selecting strategic partners.

This plan is very much similar to a statement submitted to the Prime Minister by the Ministry of Construction last September, with criteria including that strategic investors register to purchase at least 5 per cent of the 30 per cent stake, or VND225 billion (US$10.1 million), be able to meet requirements in financial capacity, and have prestige and branding in the market.

Candidates must also have total assets of at least VND1 trillion (US$45 million) as at 2015 and equity of VND300 billion (US$13.5 million), and must be profitable and not saddled with bad debts, according to the statement.

Since last September, Song Da has raised its charter capital to the current value VND4.5 trillion (US$198.34 million) from VND4.44 trillion (US$195.7 million) after being told to reduce its debt-to-equity (D/E) ratio to below 3, the minimum set by the government, from 3.8 at the end of 2015.

The current charter capital of VND4.5 trillion (US$198.34 million), also ensures a 3 per cent dividend payout for the years post-equitization, according to the construction ministry.

Its 2016 pre-tax profit was VND370 billion (US$16.3 million), down 35.2 per cent against 2015. It projects total revenue of VND10.7 trillion (US$471.65 million) this year and pre-tax profit of VND320 billion (US$14.1 million), down 21 per cent and 14 per cent, respectively.

Song Da projects even lower growth in 2020, with total revenue to fall to VND4 trillion (US$176.3 million) and pre-tax profit VND216 billion (US$9.5 million), with a return on assets (ROA) of just 1 per cent.

Song Da accounts for 85 per cent of Vietnam’s hydroelectricity plant construction. Not only is it the largest contractor, it also leads in human resources, technical specialization, and machinery and has also built major infrastructure, including tunnels, highways, and factories.

It currently has 24 subsidiaries in which it owns more than half of charter capital, and 16 affiliates.