PART 2.

CASE: NISSANs OPI

1. COMPANY OVERVIEW
Vissan Joint Stock Company (OTC: VISSAN)
Vietnam Meat Industries Ltd Company (Vissan), a member of Saigon Trading Group (SATRA),
has been established since 1970. Vissan is considered to be leader in manufacturing, processing
and trading meat products of Vietnam.
Vissan maintains leading position in processed food in Vietnam.
Vissans strength comes from processed meat products such as sterilized sausage, jambon and
fresh sausage, which are mainly consumed domestically with a high gross margin from 28% to
30%. Sterilized sausage products and fresh sausage products of Vissan accounts for 65% and
70% of nationwide market share respectively. According to Euromonitors statistics on processed
meat and seafood in Vietnam (includes chilled and frozen processed meat) in Dec 2015, Vissan is
the largest brand name with 23.6% market share.

Enterprise value at the time of equitization

Item
(1)
A.ASSET
Fixed assets and long ter
investment
1. Fixed assets
a. Tangible assets
- Building and Architecture
- Machinery and equipment
- Means of transportation
- Management equipment
b. Intangible assets
-Land use rights
-Other intangible assets
2. Long term investment
3. Construction in progress
4. Escrow account and long
term deposits
5. Long term prepaid expenses
II. Current assets
1. Cash
a. Cash in hand
b. Cash in banks
c. Cash equivalent
3. Accounts receivable
III. Total Goodwill
1. Goodwill from equitization

Book value
(2)
1,254,256,026,026,67
4
242,356,004,327

Revaluation
(3)
1,638,946,373,387

Balance
(4)
384,960,346,713

447,987,932,264

205,631,927,937

195,640,845,105
77,012,094,291
13,291,818,106
40,892,895,961
17,785,606,231
5,041,773,993
118,628,750,814
117,644,598,042
984,152,772
2,958,707,212
33,047,979,048
1,360,500,000

397,291,282,617
129,451,565,072
38,128,841,732
62,668,832,434
21,676,003,228
6,977,887,678
267,839,717,545
266,855,564,773
984,152,772
5,512,670,000
33,047,979,048
1,360,500,000

201,650,437,512
52,439,470,781
24,837,023,626
21,775,936,473
3,890,396,997
1,936,113,685
149,210,966,731
149,210,966,731
2,553,962,788
-

9,347,972,962
1,011,900,022,347
378,820,945,658
5,699,463,600
52,932,314,874
320,189,167,184
198,000,069,443

10,775,500,599
1,013,515,114,649
378,820,945,658
5,699,463,600
52,932,314,874
320,189,167,184
198,700,621,044
177,443,326,474
93,401,812,265

1,427,527,637
1,615,092,302
700,551,601
177,443,326,474
93,401,812,265

2. Goodwill from trademarks

3. Goodwill from rights of
exploring kiosks in markets
B. UNUSED ASSETS
I. Fixed assets and long term
investment
1. Fixed assets
- Building and Structures
C. FIXED ASSETS TO BE
LIQUIDATED
I. Fixed assets and long term
investment
1. Fixed assets
II. Current assets
D. ASSETS FROM BONUS
AND WELFARE FUND
TOTAL ASSETS (A + B + C
+ D)
TOTAL ENTERPRISE
VALUE (A)
E1. Liabilities
E1b. Fixed assets form Bonus
and welfare fund
E2. Non-business
expenditure source
TOTAL ACTUAL
STATEOWNED CAPITAL
[A- (E1+E2)]

58,574,480,876
25,467,033,333

58,574,480,876
25,467,033,333

16,699,922,569
16,699,922,569

16,699,922,569
16,699,922,569

16,699,922,569
16,699,922,569
463,421,062

16,699,922,569
16,699,922,569
463,421,062

463,421,062

463,421,062

463,421,062

463,421,062

1,271,419,370,305

1,656,109,717,018

384,690,346,713

1,254,256,026,674

1,638,946,373,387

384,690,346,713

717,953,494,169
(558,004,351)

829,803,236,663
-

111,849,742,494
558,004,351

536,302,532,505

809,143,136,724

272,840,604,219

Summary of enterprise valuation

- Total value of Vissan:
Book value : 1,254,256,026,674 VND
Revaluation value : 1,638,946,373,387 VND
Balance : 384,690,346,713 VND
- Total value of state-owned capital
Book value : 536,302,532,505 VND
Revaluation value : 809,143,136,724 VND
Balance : 272,840,604,219 VND
2. EARNINGS BEFORE OPI

Vissan has a long operating history in food processing with an average revenue of VND3,840
billion per year. Companys core business is manufacturing fresh meat and processed food.
Chilled and frozen food contribute modest portion as compared to the two first segments.
3. CAPITAL STRUCTURE AFTER IPO
3.1. Chartered capital
Based on the scope of the business, the total assets and the business plan
for the period 2014 2019 of the Company, and taking into account the cost
of capital for the owners equity and debt, the chartered capital of VISSAN at
the time of equitization is VND 809,143,000,000.
3.2. Shareholder structure after the offering
For the equitization of the Company, the number of shares being offered to
investors is 80,914,300 equivalent to 100% of VISSANs chartered capital.
The shareholder structure of VISSAN will be as follows:

N
o

Investor

State-owned

Strategic
partner

Number of
shares

Par value
(VND)

52,594,295

525,942,950,000

65

11,328,002

113,280,020,000

14

Public

11,328,002

113,280,020,000

Labor

4,869,300

48,693,000,000

6,02

Labor Union

794,701

7,947,010,000

0,98

80,914,300

809,143,000,00
0

100

Total

14

Source: Vissan
Ownership structure after IPO

6% 1%
14%

14%
65%

State-owned

Strategic partner

Labor

Labor Union

Public partner

4. USE OF PROCEEDS
The management and use of proceeds from equitization shall comply with
article 42 of Decree 59/2011/ND-CP and section III of the Circular
196/2011/TT-BTC.
The remaining proceeds from the sale of the State capital will be deposited
into the Rearrangement and Development Enterprise Fund.
On the basis of the actual value of the State capital in enterprise and the
proportion of the State capital in the joint stock company, the Company

expects the following plan for the use of the proceeds from equitization, at
the starting price of VND 17,000 / share:

COMPANYS PROJECTION UNTIL 2020

Based on the companys forecast business results until 2020, the
slaughtering and processing plants will squeeze companys profit when they
go into operation as high expenses will be recorded, especially interest
expense. However in the case if the strategic partner supports Vissan
financially with low interest rate, Vissans business result would be higher.

Planned revenue grows 7% per year from 2015 to 2020. As planned, the
profit after tax grows slowly for 3 years from 2016 to 2019 (CAGR = 3.7%)
and then declines.
In particular, since 2019, the profit decreases to 9 billion from 106 billion of
2018 due to increase of financial expense and increase of depreciation costs
after the operation of processing plant in Long An from 2019 (expectation).
Expected Invesment plans in the period 2015-2020

Expected
value (million
VND)

N
o

Project

Year

Relocation
and
technological
renovation of slaughter factory of
Vissan Jsc.

2015-2018

1,440,210

Investment in construction of new

factory

2016-2018

323,138

Import breeding pigs

2016-2019

20,000

Investment
equipment
annually

in
and

machinery,
spare
parts

Repairing construction annually

Total

2016-2020

75,000

2016-2020

31,000
1,799,673

Source: Vissa
In general:

Make use of all resources and Vissans brand strength, and promote
investment in all fields in order to perform the duties of the company in
the post-equitizaton period.
Invest in infrastructure, enhance production capability and synchronize
manufacturing facilities at the Company according to HACCP standards
and invest in the production line in other areas.
Develop distribution channels, especially the retail locations of fresh
meat. Focus investment on factory relocation and the development of
high quality pig farms to stabilize the source of raw materials for the
coming years.

5. ISSUING PROCESS
5.1. Offering to strategic investors
Currently, the criteria for strategic investors selection to buy equitized shares
at Vissan was approved by Ho Chi Minh Peoples Committee in Dispatch
No.7995/UBND-CNN dated 21/12/2015. The number of strategic investors
and offering volume are planned to be as follows:

Number of investors who are eligible to buy shares: no more than three
investors
Offering volume to strategic investors is 11,328,002 shares, equivalent
to 14% of chartered capital

The offering to strategic investors will be conducted after the initial public
offering (IPO).

The selection of investors through auction needs to preserve the principle of

choosing the highest bidders that can fulfill the offered shares, but no more
than three investors are selected. Moreover, the price of the successful
bidder cannot be lower than the auction price of the IPO. Based on the result
of the auction, HCM City Peoples Committe approves the list of selected
investors.
Vissan shortlisted three investors to be their strategic partners, consisting of
CJ CheilJadang Corporation, Proconco and Anco.
At the auction on March 24, the three strategic investors have purchased
11,328,002 shares. The highest price was offered by Anco, with VND126,000
per share, followed by Proconco with VND125,000 and CJ Vietnam with
VND120,600 per share.

5.2. Investors participate in the auction process

Size of offering for the investors through auction process

There are 11,328,002 shares with total face value of VND 113,280,020,000,
equivalent to 14% charter capital of VISSAN to be offered through auction.
Method of offering
The offering of shares to the public will be conducted in the form of public
auction through Ho Chi Minh Stock Exchange (HOSE). The auction process
must be in strict compliance with regulations and requirements
implemented by the Auction Agent
- Timing: March 07, 2016
- Auction Participants: individual investors, local and foreign institutional
investors in accordance with the law
- Restrictions for foreign investors: compliance with article 11 of Circular
123/2015/TT-BTC of the Ministry of Finance dated 18 August 2015, item 2
of article 1 of Decree 60/2015/ND-CP of Government dated 26 June 2015
on the percentage of foreign ownership in the Vietnam stock market.
Offering price
-

The offering price will be determined at the time of IPO based on:
-

The valuation report of VISSAN prepared by VCSC;

Vietnam and global stock market conditions as well as other related
factors prior the IPO. The minimum offering price is VND 17,000 per
share.
Ending of the auction

With a total of 11.33 million shares being offered, the first auction of Vissan
Jsc. Was very dramatic when there were 142 investors (123 local individuals,
six local companies, six foreign individuals, and seven foreign institutions)
offering to purchase 63.6 million shares volume.

In result, all of shares were offered to five investors with the highest winning
price at 102,000 VND per share and the lowest successful bid at 67,000 VND
per share. The average price w 80,053 VND per share which was 4.7 times
higher than the starting price. The total value of shares offered for sale
reached 907 billion VND, which is one of the biggest IPO ever in Vietnam.
Auction Information

Total shares volume

11,328,002

Highest price

102,000

Lowest price

67,000

Average price

80,053

Number
investor

of

winning

bids

by

Number of
organization

winning

bids

by

Total value

906,804,13
8,000

6. CONCLUSIONS
"VISSAN is only suitable for investors with long investment horizon, who want
to gain exposure in the fresh meat and meat-related product sector," SSI
Securities said in a report prior to the IPO. It defines a "long investment
horizon" as a period of over three years.
The facts that the number of registration exceeded 5.6 times the number of
shares offered and the successful bid beyond expectations showed the
confidence of investors in Vissan. Obviously, the brands value of Vissan was

highly appreciated and assessed the potential development, prospects for

investments in Vissan.
The successful IPO of Vissan Jsc. was reminiscent the IPO of Vinamilk. Both
showed the expectation of investors about the future development of food
processing industry in Vietnam.