REVIEW
of
FINANCE -
November, 2018
15
companies.
With the strong development in the right
direction, the stock market has become the driving
force for the establishment and development
of a more active and effective private sector,
contributing to the promotion of equitization of
SOEs and restructuring of the economy both in
terms of sectors, fields and participants.
Since 2005, more than 750 SOEs have
successfully auctioned their shares on the two
exchanges. Scale, performance, governance
quality of listed equitized SOEs have been
improved: Total equity increases by 16% per
year on average; Turnover grows by 4% per year,
profits rises by about 9%/year.
Among the 100 listed enterprises with the
largest market capitalization (about VND 3.1
million billion), on average in the period from
2012 to 2016, return on equity (ROE) of each
enterprise increased from 12.16% to 16.65%; Total
assets increased from VND 35,130 billion to VND
60,089 billion and equity increased from VND
4,964 billion to VND 9,054 billion. In this group,
there are 46 private companies with capitalization
level of 40%. In the 2012-2016 period, the total
assets of listed companies increased by 80%,
equity increased 2.2 times and the total profit
increased by 2.5 times.
The stock market has narrowed the gap
between private equity and listed equitized
companies, whereby the average equity size
of listed equitized SOEs compared to private
listed companies fell from 1.6 times in 2012 to
1.3 times in 2016. Many private companies have
developed strongly after listing on the stock
market. Typically, in the case of Vingroup, the
capital contribution of shares and equity at the
initial listing was VND 800 billion and VND 1.842
billion respectively in 2007 and as of now has
increased to VND 26,377 billion and VND 45,266
billion; At the same time, it has helped expand the
company’s core businesses such as agriculture,
industry, healthcare, education and retail.
Regarding equitization, divestment has
helped diversify ownerships as well as enhanced
transparency and efficiency. Of the 54 listed SOEs
among the 100 listed companies with the largest
market capitalization, the average ratio for state
ownership is about 47%, of which 29 enterprises
have 50% of capital owned by the Government.
The listing of SOEs after equitization helps
promote the process of public capital divestment,
ensuring transparency and efficiency in selling
prices according to the market mechanism and
at the same time improving the performance of
post-equitized enterprises.
A number of post-equitized SOEs have had
outstanding performance such as Vietnam Dairy
Products Joint Stock Company, Cotecons Joint
Stock Company, etc. Comparing to the period
of 2012-2016, the return on equity of VNM are 2
to 3 times higher than the average profit rate of
listed companies and 4-5 times higher than the
mobilization interest rate of commercial banks;
The size of equity and assets of VNM has also
increases 1.5 times.
Listed companies are leaders in corporate
governance, information disclosure and
application of modern accounting, auditing
and financial reporting standards. Corporate
governance standards applied to listed companies
andpubliccompaniesinVietnamstockmarkethave
GRAPH 2: VN-INDEX OVER THE YEARS 2006-2018
Source: State Securities Commission
2013
31
31.5
34.5
44
74
0
10
20
30
40
50
60
70
2014
2015
2016
2017
GRAPH 1: SIZE OF STOCK MARKET (%GDP)
IN THE PERIOD OF 2013-2016
Source: State Securities Commission
