SCIC pours up to US$345.6 million in Vietnam Airlines

January 19, 2021 - 09:46
The State Capital Investment Corporation (SCIC) plans to invest VNĐ8 trillion (approximately US$345,576) in Vietnam Airlines JSC (HVN). The amount is equal to 25 per cent of HVN’s charter capital.
Vietnam Airlines will issue VNĐ8 trillion of shares to existing shareholders. VNA/VNS Photo

HÀ NỘI — The State Capital Investment Corporation (SCIC) plans to invest VNĐ8 trillion (approximately US$345.6 million) in Vietnam Airlines JSC (HVN). The amount is equal to 25 per cent of HVN’s charter capital.

“Vietnam Airlines will issue VNĐ8 trillion in shares to existing shareholders to raise its charter capital. And SCIC represents the Government to buy the shares,” Nguyễn Chí Thành, general director of SCIC, said during a press conference last Thursday.

The two sides had a meeting to work out the HVN share price, Thành added.

Vietnam Airlines is creating a share offering plan to raise its charter capital and needs to get opinions from the State Securities Commission of Việt Nam. Meanwhile, SCIC’s mission is to price HVN's share value.

In order to define the share offering price, Vietnam Airlines has to evaluate its own value based on its five-year business plan. But COVID-19 is a biggest challenge for the carrier’s business plan since there is no indication of when the pandemic will be over and international flights can resume.

“Amid the spread of COVID-19 around the world, it is very difficult to create a business plan for Vietnam Airlines. If there is no business plan, we can not judge the enterprise’s value. Only when Vietnam Airlines opens international flights, can its business improve,” Thành said.

So to price Vietnam Airlines, SCIC will select a well-known accounting firm with a good reputation to assess the carrier’s value. That accounting firm can use one of a number of business valuation methods, Thành added.

On the Hồ Chí Minh Stock Exchange, HVN's share price declined 0.65 per cent to finish Monday at VNĐ30,650. The shares increased nearly 7.4 per cent since the beginning of 2021.

In its third-quarter result, Vietnam Airlines posted a decline of more than 70 per cent to VNĐ7.6 trillion in consolidated revenue. It reported a loss of nearly VNĐ4 trillion in profit after tax.

As for the carrier's performance in 2020, its consolidated revenue reached VNĐ42.5 trillion, including VNĐ33 trillion from its parent company. The results exceeded their respective targets by VNĐ1.9 trillion and VNĐ448 billion.

It was projected to suffer a loss of VNĐ14.4 trillion. Of the total, its parent company’s loss in 2020 was estimated at more than VNĐ12 trillion, which was VNĐ2.42 trillion lower than the previous forecast. VNS