VietJet Aviation, Vietnam’s largest private airline, has announced its intention to increase its foreign ownership limit from 30% to 49% in its upcoming meeting on April 20th.
In this meeting, shareholders are predicted to discuss raising the foreign ownership ratio, with a view of boosting liquidity and subsequently improving VietJet’s investment and mobilisation capacity. The company also plans to issue preferred shares to employees between 2017 and 2019 in the form of share issuance or bonus shares (3% of charter capital at the time of issuance), as well as a 50% dividend with a maximum cash payout of 30%.
For share issuance, the issue price will not be below the book value at the time of issuance, while the case for bonus shares will be determined by the undistributed profits nearest to the time of issuance. The time scale for implementation will be decided by the board, but is expected to be completed in three tranches in 2017, 2018 and 2019.
In January, a sum of 26 foreign investors accounted for 24% of the company’s total holdings, though this figure has not fluctuated as much since then. The aviation company also posted a 113% increase in after-tax profits in 2016 (from 2015), the final figure standing at VND 2.49 trillion ($113 million). The after-tax profits have continually experienced huge increases since 2013 (2013 = VND 32 billion; 2014 = VND 360 billion; and 2015 = VND 1.171 trillion), but a slowdown may occur due to increase competition from other low-budget airlines and a potential increase in oil prices in the medium-term.
Earnings-per-share stood at VND9,586, making VietJet one of the best performers on both of Vietnam’s exchanges (Hanoi Stock Exchange and Ho Chi Minh City Stock Exchange). VietJet’s share price is up 21.11% since it first listed on the bourses and reached highs of VND 131,700 ($5.81).
The company is also actively exploring the option of listing outside of Vietnam, with Singapore, Hong Kong and Tokyo being the prime destinations for VietJet to tap into the international capital market. Aside from international investing, the launch of thrice-weekly direct flights from New Delhi to Ho Chi Minh City is also in the pipeline for July 2017. The flight will take approximately five and half hours and will slash transit time by up to 50%.
VietJet was also added to the MSCI Global Standard Indexes from March 14th 2017, but missed out on being included in a FTSE Index. The company could potentially be added to the MSCI Vietnam Index in the future, joining the other high performing additions FLC Faros Construction and Saigon Beer Alcohol Beverage Corporation.