Significant room remains for foreign investors in Vietjet

Vietnam’s low-cost airline Vietjet’s recently issued 2017 listing prospectus shows that there is about 25 per cent room left for foreign investors, to reach its 49 per cent foreign ownership limit.

The document notes that while the foreign ownership limit in the company is 49 per cent, only 24.39 per cent has been reached as of January 12, 2017. Dragon Capital was reported to be one of the suitors of the expected blue-chip stock.

Vietjet shares are going to debut on the Ho Chi Minh Stock Exchange (HoSE) on February 28. According to the company’s February 13 filing to the HoSE, 300 million shares will be listed, and the initial reference price will be VND90,000 ($3.9).

The price values Vietnam’s low-cost carrier at $1.2 billion, making it the first heavy-weight IPO of 2017. The VND90,000 rate was surmised from the average price-earnings ratio of 11.52 of four regional airlines, namely Air Asia (Malaysia), Asia Aviation (Thailand), Cebu Pacific Air (the Philippines), and Air Arabia (UAE).

“Earnings per share in 2016 was VND8,726, resulting in the company’s share value of VND100,524 apiece based on the selected average P/E index. As per that valuation, the company decided to set the listing price of VND90,000,” said the prospectus.

Vietjet’s three major shareholders include Vietjet CEO Nguyen Thi Phuong Thao (9.42 per cent), her recently established Huong Duong Sunny Investment Ltd. (23.24 per cent), and the government of Singapore (5.48 per cent).

On January 5 Vietjet announced that it would issue an additional 22.4 million shares, equal to 7.46 per cent of the total shares currently in circulation, at VND84,600 ($3.7). Vietjet expects to earn VND1.89 trillion ($83 million) from this sale, and its registered capital to rise to VND3.224 trillion ($141.7 million).

The Vietnamese aviation industry is one of the fastest in Southeast Asia. According to Civil Aviation Administration of Vietnam, there were 18 million international and 45 million domestic passengers in 2015, which is expected to reach 122 million in total by 2020.

In 2016 Vietjet reported net profit of VND2.29 trillion ($100 million), on revenue of VND27.5 trillion ($1.2 billion).

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By Tom Nguyen