Will Thai giant take over Binh Minh Plastics?
The State Securities Commission (SSC) has approved a plan to lift the foreign ownership ratio ceiling in Binh Minh Plastics (BMP) to 100%. Analysts believe that Nawaplastic Industries (Saraburi) from Thailand will be a candidate in the race for control of BMP.
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Nawaplastic in 2012-2013 acquired a 20.4% BMP stake and sent its representative to the company’s management board. Besides BMP, Nawaplastic also holds a 24% stake in Tien Phong Plastics.
Nawaplastic’s CEO Kanet Khaochan once stated that the company is considering raising its ownership ratio to 49%, the highest possible level as stipulated by law.
However, the plan could not be implemented because the real foreign ownership ratio in BMP had hit the ceiling level (foreign institutional investors hold 48.53% and foreign individual investors 0.45%).
In mid-April 2017, SCIC stated it will divest from BMP. Once SCIC leaves and SSC approves the 100% foreign ownership ratio, analysts predicted that Nawaplastic will grab the opportunity to acquire more BMP shares.
Nawaplastic is a Thai manufacturer and supplier of PVC plastic tubes in Thailand, which is also the major product of Binh Minh Plastics.
SCG Group, its holding company, is the second largest corporation in Thailand and among the largest corporations in SE Asia.
BMP share price decreased in the last six months from VND100,000 per share to VND70,000. However, the share recovered recently with the price having increased by 9% to VND81,000 per share.
MB Securities, in its report released in late June 2017, predicted that if the foreign ownership ratio limit is lifted, Nawaplastic would be willing to pay a lot to acquire a controlling stake in the plastics company.
The amount of money the Thai enterprise has to pay for the stake from SCIC would not be high, estimated at VND1.8 trillion.
MB Securities believes that SCIC will complete the divestment this year.
Meanwhile, Maritime Securities in the report released on August 16 commented that the SSC’s approval on foreign ownership ratio lifting has helped BMP price bounce back.
Bao Viet Securities’ September update also said the lifting and the M&A possibility will give a push to BMP shares to help the share price rise again.
Commenting about Binh Minh’s business performance, HSC’s analysts said the plastics manufacturer’s profit has decreased because of the crude oil price increase and problems in pricing.
The strong development of Hoa Sen in plastics tube products is a threat to Binh Minh.
Tien Phong Plastics’ management board is being cautious about its business plan, pointing out that Hoa Sen is a rival with large capacity, powerful financial capability, large distribution network and flexible business policy.
