Bourse suspends trading of Intimex shares

The Ha Noi Securities Trading Centre has suspended trading of Intimex shares and has announced that it will audit the results of the retail distributor’s intitial public offering last month.

The suspension is pursuant to an order from the Ministry of Trade, the centre said, in order to give the centre time to clarify some irregularities that appear to have occurred in the share auction.

On April 12, Intimex made an IPO on the Ha Noi bourse of 1.6 million shares, with an offering price of VND10,200 each. At the close of trading, bids had risen to VND160,000 (US$10), 16 times higher than face value.

Of note, according to the centre, is that the winning bids came from 11 investors, all Vietnamese, who each placed an exact order for 1.6 million shares at VND160,000.

Financial statements issued by Intimex prior to the IPO suggested the shares were overpriced. During 2004-06 period, the ratio of gross profits to capital fell markedly, a trend that would normally make investors wary.

Furthermore, in the third quarter of last year, Intimex posted losses of VND8.3 billion ($518,750) and carried a debt load of VND312 billion ($19.5 million).

Some market experts suggested that the total value of land use rights the company holds were a countervailing factor driving up the price of shares during the IPO.

At present, Intimex owes 19 parcels of land across the country with a total area of 2.3 million sq.m, including a valuable area of 2,871 sq.m near Ha Noi’s Hoan Kiem Lake, one of three lots in
Ha Noi issued to Intimex under decision of the Ha Noi’s People Committee.

Other irregularities in the IPO include Intimex’s failure to publish a list of shares would be held by the company’s top executives following the IPO.

One expert suggested that the failure to disclose indicated a plan by these major investors to hold onto a controlling interest, excluding outside investors and winning all the shares in the auction.

Under Government regulations, employees of a company are entitled to purchase shares at 60% of market cost when the company equitises. However, the share prices were pushed so high that few staff within the company could afford to buy, even at the discounted price.

All of these ambiguities would be clarified soon, promised Minister of Trade Truong Dinh Tuyen.

Last Tuesday, prior to the suspension of trading, Intimex issued additional shares to raise its charter capital from VND14.4 billion ($900 million) to VND28.8 billion ($1.8 billion). 94% of the 1.4 million new shares were earmarked for existing shareholders at a face value of VND10,000 each.

Source: VNS