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REE to quit non-core business, focus on power, coal, water

Update: April, 01/2013 - 10:02
Refrigeration Electric Engineering Co invested in the Saigon Pearl 2, a luxury apartment complex, in HCM City. The company would divest from its non-core business to focus investment on the electricity, water and coal industries this year. — File Photo
HA NOI (VNS)— Refrigeration Electric Engineering Co (REE) would divest from its non-core business to focus investment on the electricity, water and coal industries this year, shareholders heard at their annual meeting last week.

The company finished restructuring its securities investment last year.

Its portfolio currently included shares in three companies valued at VND20 billion (US$0.95 million), and REE would divest from these firms this year, according to company chairwoman and CEO Nguyen Thi Mai Thanh.

She said REE would need around VND1 trillion ($47.6 million) to invest in the electricity, water and coal sectors.

Last year, REE invested VND584 billion ($27.8 million) in electricity and coal companies, in which the largest investment accounted for VND429.5 billion in Pha Laii Thermal Power (PPC).

The remaining investments in Vinacomin Nui Beo Coal (NBC) and Vinacomin Deo Nai Coal (TDN) were VND23.6 billion and VND39 billion.

"PPC shares last year had pretty good price of around VND7,000-8,000, while the company's potential remains enormous," Thanh said. In addition, the value of the Japanese yen was declining, which was very beneficial for PPC loans.

"The coal industry is also a high profit sector," she added. Electricity prices tended to go up with coal prices. "Therefore, becoming a shareholder of companies in the sectors will be a huge advantage for REE in the long term."

Divestment from Sacombank (STB) and Asia Commercial Bank (ACB) in the past year brought more than VND782 billion to the company. The investment in ACB was not profitable, losing VND100 billion with a lot of provisioning used.

REE also said yesterday it would add electricity and water to its business registration certificate.

By the end of last year, the company's investment in the banking and financial sector decreased by 2 per cent and property by 12 per cent, while the infrastructure and coal sector was up 80 per cent.

REE targets revenue of VND2.4 trillion this year, rising only 0.2 per cent compared to last year, while net profit is expected to slightly decline to VND650 billion.

Last year's dividend will be paid at 16 per cent, while the minimum ratio for this year's payment will be 12 per cent. — VNS


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