Hoa Phat to Sell Convertible Bonds as Stocks Rally

VNStockNews.com - Hoa Phat Group Joint-Stock Co., Vietnam’s biggest-listed steel producer, plans to raise as much as 1.6 trillion dong ($90 million) by selling convertible bonds to take advantage of a rally in the stock market.

The one-year securities will pay zero coupon and can be converted into about 20 million shares, Ly Thi Ngan, chief financial officer, said by telephone from the capital today. The company is seeking approval from shareholders to sell the debt in November and December, she said.

“The prospect for the stock market is good, and that will make convertible bonds more attractive,” said Le Ba Hoang Quang, Hanoi-based head of research at Sacombank Securities Ltd., Vietnam’s second-biggest brokerage.

Hoang Anh Gia Lai Joint-Stock Co., which is run by Vietnam’s richest man, and Corp. for Financing & Promoting Technology, the country’s largest software maker, have sold convertible bonds this month as the stock market rallied. The VN Index advanced 30 percent this half, the biggest gain in Asia after Mongolia.

The VN Index fell 3.1 percent to close at 581.49 today. The benchmark measure will rise to 620 by the end of the year, Quang said. Hoa Phat, a maker of steel products, refrigeration and manufacturing equipment, fell 1.9 percent to 77,000 dong, a six- day low, on the Ho Chi Minh City Stock Exchange today.

Hoa Phat is the 11th biggest company on the exchange and has a market value of 15.1 trillion dong, according to data compiled by Bloomberg.

Construction Increases

“We will use the funds raised from the sale to contribute to the project of building a new urban area south- west of Hanoi,” Hoa Phat’s Ngan said. She said Hoa Phat is responsible for about a quarter of the $6 billion housing, schools and hospital complex, which is set to start construction in June.

The company’s earnings jumped 50 percent in the third quarter on increased demand from the government’s stimulus package. Net income rose to 359 billion dong, bringing total profit for the nine months to more than 1 trillion dong, according to a statement on its Web site Oct. 21.

Construction in Vietnam grew 9.7 percent in January to September, exceeding the overall 4.6 percent growth rate of the economy during the period. Building accounted for 5 percent of gross domestic product.

Hoa Phat, based in Hung Yen province near Hanoi, hasn’t yet chosen the managers for the bond sale, Ngan said.

Saigon Securities Inc., Vietnam’s fourth-biggest broker, plans to sell 2 trillion dong of convertible bonds in the first quarter to raise funds for investments, Nguyen Duy Hung, chief executive officer of the company said Oct. 22.

Hoang Anh Gia Lai raised 1.45 trillion dong of securities on Oct. 10, and FPT sold 1.8 trillion dong of convertible bonds. (Bloomberg)