The State Capital Investment Corporation (SCIC) plans to invest 8 trillion VND (approximately 345.6 million USD) in Vietnam Airlines JSC (
HVN
). The amount is equal to 25 percent of
HVN’s charter capital.
“Vietnam Airlines will issue 8 trillion VND in shares to existing shareholders to raise its charter capital. And SCIC represents the Government to buy the shares,” Nguyen Chi Thanh, General Director of SCIC, said during a recent press conference.
The two sides had a meeting to work out the
HVN share price, Thanh 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 Vietnam. 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 cannot judge the enterprise’s value. Only when Vietnam Airlines opens international flights, can its business improve,” Thanh 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, Thanh added.
On the Ho Chi Minh Stock Exchange,
HVN's share price declined 0.65 percent to finish January 18 at 30,650 VND. The shares increased nearly 7.4 percent since the beginning of 2021.
In its third-quarter result, Vietnam Airlines posted a decline of more than 70 percent to 7.6 trillion VND in consolidated revenue. It reported a loss of nearly 4 trillion VND in profit after tax.
As for the carrier's performance in 2020, its consolidated revenue reached 42.5 trillion VND, including 33 trillion VND from its parent company. The results exceeded their respective targets by 1.9 trillion VND and 448 billion VND.
It was projected to suffer a loss of 14.4 trillion VND. Of the total, its parent company’s loss in 2020 was estimated at more than 12 trillion VND, which was 2.42 trillion VND lower than the previous forecast./.