Vietnam developer Becamex IDC plans to auction 300 mln shares

Becamex IDC Corp, a leading eco-industrial and urban real estate developer in Vietnam, plans to auction 300 million shares with a minimum starting price of VND50,000 ($1.97) apiece on the Ho Chi Minh Stock Exchange (HoSE).

The auction will be held in the fourth quarter of 2024 or some unspecified time in 2025 as soon as the State Securities Commission turns a green light.

If successful, Becamex IDC, listed on the HoSE as BCM, will have its charter capital increase from VND10.35 trillion ($408.7 million) to VND13.35 trillion.

It has determined the auction’s starting price using a combination of factors, including book value and average closing price over the latest 30 trading days.

The shares in this auction will be freely transferable, as they are being sold through a public bidding process.

The auction would be a rare high-value transaction on the Vietnamese stock market in general and the HoSE in particular. There have been very few of them after the large-scale IPOs of companies like dairy giant Vinamilk, brewer Sabeco and Vietnam Rubber Group in 2017-2018.

Recent notable transactions, such as the Ministry of Construction’s divestment from industrial park developer Idico (IDC) and Petrolimex’s sale of stake in PGBank (PGB), have been valued under VND3 trillion ($118.15 million).

Becamex IDC, located in the southern industrial hub of Binh Duong, plans to use the funds raised to invest in its ongoing projects, strengthen its subsidiaries, and restructure its finances.

Among key investments earmarked are: VND2.8 trillion ($110.24 million) for Cay Truong Industrial Park; VND3.5 trillion for the expansion of the Bau Bang Industrial Park; and VND3.63 trillion as capital contributions to its joint venture Vietnam-Singapore Industrial Park (VSIP) and its subsidiaries Becamex Binh Phuoc and Becamex Binh Dinh.

The company will also allocate VND5 trillion ($196.9 million) for financial restructuring.

Weak investor interest

Notably, it failed to attract investor interest in the previous two share sales. In December 2017, the company sold just 19 million shares, or 6.1% of the planned volume. In January 2018, it sold just 5.1 million shares of 296.46 million units offered.

In the two above-mentioned sales, Becamex IDC sold 7.7% of 311.2 million shares for VND745 billion ($29.42 million).

As of September 30, 2024, the company was 95.44% owned by the Binh Duong provincial administration.

BCM has experienced a notable rebound in recent months, rising 33% to VND68,000 ($2.68) on Friday from a three-year low of VND51,600 in April.

The upsurge has been attributed largely to the company’s strong performance. In the first half of 2024, the company reported net revenues of VND3.2 trillion ($126 million), up 6% from the same period last year. Its net profit rose three times year-on-year to VND769 billion ($30.3 million).

The company’s gross margin improved from 57% to 64.2%, and income from joint ventures and associates jumped from VND220 billion ($8.66 million) to VND756 billion, providing a significant boost to its earnings.

According to broker Saigon Securities (SSI), the strong performance in gross margin was largely due to high profitability in the Bau Bang residential project, where land clearance costs were low and legal procedures were complete.

In addition, the firm’s industrial parks have benefited from rising rents and profits from its joint ventures have also increased significantly, particularly from VSIP, in which Becamex holds a 49% stake.

However, the company is still behind on its full-year targets, having reached just 35.5% of its revenue goal (VND9 trillion or $345.33 million) and 33% of its profit target (VND2.35 trillion or $92.52 million) for 2024.

However, SSI analysts remain optimistic, forecasting stronger earnings in the second half of the year, driven in part by revenue from land sales at the New Binh Duong City development, which could help the company meet its annual objectives.