The story about SCIC and the milk cow (Part 1)

VietNamNet Bridge – The State Capital Investment Corporation (SCIC) has reported an impressive business result for 2012. However, experts still can see big problems of the state’s super-power.

Vietnam, SCIC, investment, power, policy, encouragement

Vinamilk – the milk cow of SCIC

In Vietnam, SCIC is a powerful corporation which specializes in making investment with the state’s money. It injects money in the potential businesses for profit or carries out the investment deals as instructed by the State. Therefore, SCIC is believed to have a so called “super power.”

The powerful corporate has reported a “bountiful crop” 2012 with sky high profits from the investment deals. However, economists have pointed out that most of the profits came from one investment deal in Vinamilk, the dairy producer which now holds the biggest dairy market share in Vietnam.

Vinamilk’s shares were traded at VND98,000 on January 24, 2013. As such, with 375 million Vinamilk shares, SCIC now has VND36,750 billion worth of Vinamilk shares. The figure represents 75 percent of the total investment portfolio of the corporation which now invests in 416 enterprises.

Vinamilk’s finance report showed that its sales and post tax profit in 2012 increased by 23 percent and 39 percent, respectively. With the brilliant business result, the EPS (earning per share) of the dairy producer was relatively high at VND6,940 per share.

The good business result has brought high benefits to Vinamilk’s shareholders. Meanwhile, SCIC is the biggest one.

As such, since the day Vinamilk listed its shares on the HCM City bourse in January 2006, its post tax profit has increased by 8.7 times, from VND660 billion to VND5,786 billion. Vinamilk share price has increased by 10 times.

With 375 million Vinamilk shares in hands, it is obvious that Vinamilk is the milk cow of SCIC. If noting that Vinamilk paid VND1 trillion to SCIC as the dividends, one would see that the dairy giant alone made up 25 percent of the post tax profit of SCIC.

Vinamilk, in its business strategy, plans to obtain the revenue of $3 billion by 2017. And if this comes true, Vinamilk would continue the most wanted share in the stock market. This also means that the dairy producer would be the milk cow of SCIC in the next 3-5 years at least.

The impressive business result of Vinamilk in the global economic crisis explains why Vinamilk has always been put on the high positions at the international rankings.

Hong Kong magazine Corporate Governance Asia has named Mai Kieu Lien, Vinamilk’s President and CEO, as the Asia's Best CEO in the "investor relations" category.

The award has been associated with the great achievement gained by Vinamilk under the management of Lien. It had the total revenue of $1.3 billion in 2012 and the post tax profit of VND5.8 trillion.

Making investment in Vinamilk is obviously a great success of SCIC. With the accumulative dividends of VND2.6 trillion, the profit SCIC has received from Vinamilk is triple its initial investment capital.

However, SCIC still has obtained great achievements during such a short period.

The finance report of the giant showed that in 2012, it got the post tax profit of VND3.9 trillion, up by 30 percent, and the ROE (return on equity) of 22 percent, up by 32 percent in comparison with 2011. These are really the “dream” for other businesses which have been struggling every day to survive the current economic recession.


Vietnam, SCIC, investment, power, policy, encouragement