Why do Japanese want a stake in Petrolimex?
By the end of 2014, Petrolimex, the Vietnam Petroleum Import/Export Corporation (Petrolimex), held 48% of the domestic petroleum distribution market.
Amid the continuous oil price decreases (the price has dropped to a 10-year deepest low), Japanese decided to ‘take actions’: JX Nippon Oil & Energy Corporation said it would buy up to 10 percent of stake of Vietnam’s Petrolimex.
A Vietnamese analyst commented that this was a good bargain for the Japanese investor as Petrolimex is now the biggest petroleum distributor in Vietnam with a large network of filling stations throughout the country.
By the end of 2014, the corporation had 2,353 petrol stations out of total 14,000 stations nationwide.
Besides petroleum products, Petrolimex also distributes other products and makes investments in insurance companies and banks. It now holds 40 percent of PG Bank stake, and contributes capital to telcos, civil engineering consultancy, transport, real estate and car repair companies.
Petrolimex has reported very satisfactory business result for 2015 despite the sharp fall in petroleum prices in the domestic market. It surprised investors with revenue of VND146 trillion and net profit of VND2.801 trillion for the year, though it had profit of VND365 billion the year before.
The analyst commented that JX Nippon took a wise move when making investment in Petrolimex at this moment. It is now the right time to invest, when Petrolimex reports profit, while the price is very ‘reasonable’.
After the deal, JX Nippon is expected to support Petrolimex to optimize its operation system, including the management of the petrol station network and payment method.
In fact, developing business in Vietnam might be a part of JX Nippon’s business strategy drawn up several years ago, when the Japanese domestic market was predicted to decline sharply in the next five years.
The giant needs to find new markets to develop in such a context, while Vietnam and Indonesia, which have fast growing petroleum markets and avlarge population, are good choices.
However, while the Vietnamese petroleum market remains very attractive thanks to the increasingly high number of cars and high GDP growth rate, JX Nippon will have to be cautious with oil refinery projects.
JX Nippon said it might consider joining forces with Petrolimex to invest in the oil refinery project in Phu Yen province.
Meanwhile, Idemitsu Kosan has invested in a refinery project in Nghi Son Industrial Zone.
The State, when proceeding with the plan to restructure state-owned enterprises in 2016-2020, considered selling part of stakes in the Vietnamese largest petroleum distributor to reduce its ownership ratio to 65-75%.
The value of the deal, according to Asia Nikkei Review, is about US$177 million. As such, Petrolimex's valuation is at US$1.77 billion.
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By the end of 2014, the corporation had 2,353 petrol stations out of total 14,000 stations nationwide.
Besides petroleum products, Petrolimex also distributes other products and makes investments in insurance companies and banks. It now holds 40 percent of PG Bank stake, and contributes capital to telcos, civil engineering consultancy, transport, real estate and car repair companies.
Petrolimex has reported very satisfactory business result for 2015 despite the sharp fall in petroleum prices in the domestic market. It surprised investors with revenue of VND146 trillion and net profit of VND2.801 trillion for the year, though it had profit of VND365 billion the year before.
The analyst commented that JX Nippon took a wise move when making investment in Petrolimex at this moment. It is now the right time to invest, when Petrolimex reports profit, while the price is very ‘reasonable’.
After the deal, JX Nippon is expected to support Petrolimex to optimize its operation system, including the management of the petrol station network and payment method.
In fact, developing business in Vietnam might be a part of JX Nippon’s business strategy drawn up several years ago, when the Japanese domestic market was predicted to decline sharply in the next five years.
The giant needs to find new markets to develop in such a context, while Vietnam and Indonesia, which have fast growing petroleum markets and avlarge population, are good choices.
However, while the Vietnamese petroleum market remains very attractive thanks to the increasingly high number of cars and high GDP growth rate, JX Nippon will have to be cautious with oil refinery projects.
JX Nippon said it might consider joining forces with Petrolimex to invest in the oil refinery project in Phu Yen province.
Meanwhile, Idemitsu Kosan has invested in a refinery project in Nghi Son Industrial Zone.
