Before organizing 2019 General Meeting of Shareholders, the first meeting to be held since PVOIL became a joint stock company, Board of Management of PVOIL had a meeting with investors and securities companies.
At the meeting, various opinions were raised and discussed. Current price of OIL shares compared with price at IPO period, 2018 business achievements and targets for 2019 and following years were among issues concerned by investors at the meeting. PVOIL’s President & CEO Cao Hoai Duong and PVOIL’s Leaders shared their thoughts and solutions for the issues
PVOIL determines to conduct privatization with optimal plan
Answering investors’ questions why PVOIL has not completed selling stakes to strategic investors or why PVOIL was not turned into a joint stock company immediately after the IPO took place and until July 30th 2018, the company organized the first general meeting of shareholders, the company’s leaders said:
According to privatization plan approved by the government, Vietnam Oil and Gas Group holds 35,1% PVOIL charter capital, 20% stake at initial public offering and sell 44,72% charter capital stake to strategic investors. At the IPO organized on January 25th 2018, PVOIL sold more than 206 million shares with averaged price at 20.196 VND per share.
PVOIL, investors as well as shareholders expect to complete selling stakes to strategic investors according to privatization plan approved by the government. By doing that, the privatization of PVOIL will have satisfactory results, assuring the best benefits of investors, shareholders.
Hence, PVOIL actively discussed with potential strategic investors while proceeding IPO. The key investors need time to evaluate the investment potential and negotiate terms in the contracts because of the deal value is high, up to 450 million USD while the State’s regulation asks enterprises to complete selling stakes in just four months since after privatization plan approved.
Based on commitments of some strategic investors to pay a deposit for stake purchase after investment appraisal is done (1 Korean investor, 1 Japanese investor and 1 domestic investor), PVOIL has reported and sought government opinions for extending deadline for selling stake to strategic investors by three months, till end of July 2018. However, the government rejected the proposal.
After getting disapproval from the government, in just two months, PVOIL prepared to organize the first general annual meeting on July 30th 2017. Just two days after the meeting, August 1st 2018, PVOIL got certificate as a joint stock company. PVOIL made a great effort to secure benefits of shareholders, investors, and for optimum result of privatization process.
2018 business achievements is affected by outside elements
Business achievements of five final months of 2018 when PVOIL became a joint stock company received much attention from investors. According to company’s audited financial report, PVOIL’s consolidated pretax profit in the five-month period was at 83 billion VND, equal to 64% target (130 billion VND).
PVOIL’s President & CEO Duong said he and members of board of directors worried when the business target was not completed well. Low pretax profit was the consequence of 50% drop of oil price in fourth quarter 2018. Low oil price badly affected revenue and profit of PVOIL in five-month period.
Consolidated profit in fourth quarter was reported at 46 billion VND, which is much lower than 208 billion VND, 175 billion VND and 160 billion VND of three previous quarters.
Beside low oil price, proceeding finance arrangements and expenses when converting PVOIL to a joint stock company from one member limited company under State regulations affected profit of the company in the period.
In specific, consolidated pretax profit fell by 87 billion VND to 83 billion VND; parent company’s pretax profit dropped by 261 billion VND, leaving a loss at 187 billion VND due to the finance investment provisioning plan and bad debt.
Excluding budget for finance provisioning plan and bad debt, PVOIL could have met target for consolidated pretax profit and parent’s company pretax profit decided by shareholders at the first annual general meeting.
In full year of 2018, (7 months as one member limited company, 5 months as joint stock company), PVOIL reported consolidated pretax profit at 589 billion VND, completing 118% of annual adjusted target and equal to 103% of 2017 achievement.
2019 business target: continue proceeding state stake sell to below controlling ratio
At the meeting, several investors compared business targets PVOIL placed for 2019 with the target it announced when conducting IPO. Representative of the company explained that the business targets announce ahead IPO was built based on scenario that state stake at the company is reduced to 35.1% and PVOIL gets suitable strategic shareholders.
The new ownership structure brings PVOIL leaders high expectation for better business operation as it now has the flexibility and independence in making business decisions beside assistance from strategic shareholders in expanding market, developing retail system, adding more services at petroleum stations…
Unfortunately, strategic investor selection process was not realized according to the plan. This basically changed scenario of PVOIL operation after privatization. Currently, PVOIL operates under regulations applied State-owned companies.
Due to the difficulties, PVOIL’s board of directors had to adjust 2019 business targets based the situation which is different from scenario mentioned in report released before the company proceeded IPO.
During 2019 – 2020 period, beside focusing on business development, PVOIL will continue report the government and authorities and speed up selling state stake to below majority stake. PVOIL has submitted PVN the State stake divestment plan. PVOIL proposed its parent company to seek strategic shareholders have reputation, experience, capability to support PVOIL after.
Here is an evident for success privatization of PVOIL in 2018, opening new opportunity in 2019. After becoming strategic shareholder of PVOIL, SK Energy collected OIL shares in the market. As of November 13th 2018, SK Energy had more than 54.12 million shares, equivalent to 5.23% of total voting shares of the company and became PVOIL major stakeholder./.