VietJet Aviation shares surged by the 20 per cent daily limit in its trading debut on the Ho Chi Minh City Stock Exchange on Tuesday, reflecting investor interest in Vietnam’s first mainboard-listed carrier as travel demand soars in the nation.
The stock rose to 108,000 dong at the close of trading, valuing the low-cost carrier at 32.4 trillion dong (Dh5.14 billion) and exceeding the market values of some rivals such as Asiana Airlines. VietJet listed 300 million shares after an initial public offering at 90,000 dong a share.
“The surge was already anticipated as the initial price was quite cheap and this is an attractive company with a positive growth story,” said Tran Thi Hai Yen, a Ho Chi Minh City-based analyst at ACB Securities.
Rising living standards and more affordable tickets from budget carriers such as VietJet as the nation gradually liberalised its aviation market have helped to increase demand for air travel. Vietnam will continue to see a double-digit gain in passenger numbers in the next decade, after annual growth of 17 per cent in the past decade, according to ACB Securities in December.
The listing by Vietnam’s only privately owned carrier will also boost the size and liquidity of the country’s $97bn stock market, South East Asia’s second-best performer this year. Vietnam Airlines sold shares in 2014 and currently trades on the regulated over-the-counter UpCom market in Hanoi.
VietJet is the leading low-cost carrier in a country at the beginning of a long-term growth cycle with a compound annual growth rate of passenger volume forecast at 14 per cent.
The carrier’s core customers are working-class Vietnamese with low to medium incomes and an increasing demand for air travel, according to ACB Securities.
GIC, Singapore’s sovereign wealth fund, is VietJet’s largest shareholder after its billionaire founder and chief executive Nguyen Thi Phuong Thao, who has a stake of more than 60 per cent held directly and through holding companies and other entities, according to exchange filings.
“I’m very happy that VietJet managed to reach an international pool of investors,” Mr Thao said after the listing event. “The context of Vietnam is extremely favorable to investors and I believe that the IPO of VietJet will have a good impact on the Vietnam stock market.”
VietJet’s 2017 profit is poised to rise 30 percent from 2.3tn dong in 2016, the carrier forecast in January. The airline projected its passenger numbers will also climb 30 per cent this year, from 15 million in 2016.
* Bloomberg
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