Vietnam fertiliser firm drops 5 percent on debut

HANOI, Nov 5 (Reuters) - Shares in fertiliser maker PVFCCo DPM.HM dropped 5 percent to 95,000 dong ($5.9) on their debut on the Ho Chi Minh Stock Exchange .VNI on Monday as investors worried higher natural gas prices would hurt its profits.

"A combination of bad news, including lower earning expectation and higher input costs, has made investors assess its price as too inflated," a trader in Hanoi said of the starting price of 100,000 dong.

Last Thursday, the company said it expected an annual 14 percent drop in 2007 net profit to 1 trillion dong ($62 million), attributing the fall to its transformation into a publicly listed firm.

In October, the Finance Ministry raisednatural gas prices from Bach Ho, Vietnam's biggest oil and gas field, to $0.14 per cubic metre from $0.02 last year, raising material costs significantly for the company, traders have said.

On Monday, the government approved the construction of a urea fertiliser plant in the northern province of Ninh Binh at a cost of about $500 million. Another plant is planned in the southern province of Ca Mau.

PVFCCo, the short name of Petrovietnam Fertiliser and Chemicals Company, listed all its 380 million shares, valuing the firm at about $2.24 billion.

It operates the Phu My Urea Plant, Vietnam's largest with an annual capacity of 740,000 tonnes, in the southern oil and gas hub of Ba Ria-Vung Tau.

The firm said its Phu My Urea brand had a 50 percent market share in the Mekong Delta rice basket, the Central Highlands coffee belt and southeastern provinces, the main growing areas for rubber and pepper.

The firm planned to expand annual production to 925,000 tonnes by 2010, when it also planned to import 300,000 tonnes of fertiliser to meet 60 percent of domestic demand, the statement said. ($1=16,155 dong)