* Shares hit 39,200 dong by midday break vs 28,000 dong open
* Volumes thin due to low free-float - trader
* Jump could boost govt stake divestment plan
(Adds trader's comments, context)
By My Pham
HANOI, Jan 3 Shares of Vietnam Airlines
surged 40 percent on their stock market debut on
Tuesday, valuing the firm at $2.1 billion, as investors sought
exposure to the flagship carrier to tap into strong air travel
growth in the Southeast Asian nation.
A strong stock market showing could prove beneficial to the
Vietnamese government's stake divestment plan. The government
wants to sell off its stake in several state firms, including
brewers Sabeco and Habeco, and use stock
market prices as benchmarks to value its holdings in them.
Vietnam Airlines shares hit 39,200 Vietnam dong ($1.72) at
the midday break on the Unlisted Public Company Market
compared to their opening price of 28,000 dong, data
from the secondary exchange showed. There were bids for 1.3
million HVN shares, while just 700 shares were bought, the data
The carrier is 86 percent owned by the government, with
another 8.8 percent belonging to Japan's ANA Holdings,
meaning very few shares are freely available for trading.
"There was limited supply due to the low free-float, while
sellers were few as shareholders were waiting for higher
prices," said Duong Manh Dung, a trader at VnDirect Securities.
Vietnam's airline market is growing at one of the fastest
rates in Asia Pacific, boosted by a burgeoning middle class,
with the country's airlines placing multi-billion dollar
aircraft orders and the Southeast Asian nation unveiling plans
to shore up infrastructure.
Vietnam Airlines said on Monday its 2016 pre-tax profit hit
a record high of 2.5 trillion dong, jumping 140 percent from a
It has a 70 percent stake in Vietnamese low-cost carrier
Jetstar Pacific, with Australia's Qantas holding the
rest. Its other domestic affiliate is Vietnam Air Service
Company and it also owns 49 percent of Cambodia Angkor Air, a
joint venture with the Cambodian government.
The airline commands about half of the domestic market while
the two affiliates have another combined 15 percent share.
Together, they announced deals last year to buy 20 Airbus
jets worth an estimated $4.1 billion to expand their
The stock market debut of Vietnam Airlines comes as private
sector rival VietJet is gearing up to make its market debut and
has been valued at $1.2 billion, according to Thomson Reuters
Vietnam late last year also saw several major share sales
and listings, including a $3.72 billion listing of its top
brewer Sabeco where the government owns nearly 90 percent and is
keen to unload its entire stake by 2017.
Other closely watched offerings were the listing of Habeco
and the sale of a portion of state shares in dairy products
Vietnam has been seeking to accelerate the initial public
offerings (IPOs) of state-owned companies and list their shares
to boost investment and increase transparency.
(Reporting by My Pham; Editing by Muralikumar Anantharaman)