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An Phat Holdings: On the way to becoming Asean’s biggest bio-plastics group

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From a business operating only in the field of thin monolayer film, An Phat Holdings (APH) has over the past two decades clinched an interdisciplinary ecosystem staffed by more than 5,000 employees at 15 member companies across Vietnam and branches worldwide. APH is making great strides to fulfill its goal of becoming the biggest bioplastics group in Southeast Asia.

The leadership of An Phat Holdings (APH) and representatives of Ho Chi Minh City Stock Exchange at the listing of APH on July 28.

Making great strides after establishing Holdings

Formerly known as a small thin monolayer film company founded in 2002, An Phat Holdings has quickly become the largest thin monolayer film manufacturer in Southeast Asia and a leading bioplastics group with a closed business ecosystem. This is the story of a company that dares to take bold steps to revolutionize itself.

Currently, APH has expanded its business scope to a wide range of operations and manufacturing: Compostable materials and finished products; Packaging; Engineering plastics and SPC flooring; Raw materials and chemicals for plastics industry; Precision engineering and molding; Industrial real estate. APH has made its presence felt with 15 member companies in Vietnam and branches in the United States, Singapore, South Korea and France.

APH also directly owns two listed companies: Hanoi Plastics Joint Stock Company (Ticker symbol: NHH) and An Phat Bioplastics Joint Stock Company (Ticker symbol: AAA), and indirectly owns shares of 10 other companies through the two companies listed above.

The year 2017 is considered as the first milestone for APH’s spectacular growth when An Phat Holdings was officially established, marking its transformation into the holding company model and its position as the leading manufacturer of thin monolayer film in Southeast Asia. Three years later, the company’s charter capital has soared to nearly US$63 million. APH has had more than 10 new member companies under its umbrella, carried out a host of large-scale projects both at home and abroad, and achieved impressive growth.

According to its consolidated business results report, APH’s sales increased significantly from US$106 million in 2017 to US$405 million in 2019, four times as much, generating a compound annual growth rate (CAGR) of 96%. The Corporation’s owners’ equity in 2019 reached US$173 million, 104% higher than in 2017, while its total assets rose to almost US$426 million, nearly double that in 2017.

During 2017-2019, APH’s net profit posted a compound annual growth rate of 131%, and its net profit in 2019 reached US$30 million, five times higher as compared to 2017. Its ROE rose from 7.0-7.2% in 2017 and 2018 to 20.4% in 2019, indicating the efficiency of APH’s capital utilization. By Quarter II-2020, APH’s products have made their way to more than 60 countries worldwide.

Together with packaging as the main business line, since its establishment of the holding structure, APH has extended to new sectors including: Supporting industries, industrial real estate and compostable materials and finished products.

As regards supporting industries, APH has focused on high technology development with the ultimate goal of participating in the global supply chain. During 2018-2019, the enterprise invested in three major projects: acquiring a famous auto and motorbike spare parts maker; cooperating with one Vietnamese largest group to establish a factory producing auto parts; and increasing investment scale for electronic components manufacturing plants.

APH is also among a few businesses in Vietnam to venture into precision engineering and molding. Currently, the company owns a factory which is projected to become Vietnam’s leading molding manufacturer. APH’s portfolio of many famed multinational customers such as Toyota, Samsung, Honda, LG, Panasonic etc. has proved how effective the company is in this field. Also, APH has been selected by the Ministry of Industry and Trade and the Authority of Hai Duong province, and Samsung Vietnam as a leading business for developing supporting industries in Hai Duong (80km from the capital of Vietnam).

Albeit a newcomer to industrial real estate, after only more than one year, APH has attained a position in Top 10 most beneficial industrial real estate businesses in Vietnam in 2019. An Phat Complex and Quoc Tuan-An Binh in Hai Duong, both developed by APH, are located in the key economic triangle of Northern Vietnam. APH is developing these two industrial parks in its green ecosystems providing one-stop services. Currently, industrial real estate contributes approximately 11% to the corporation’s gross profit.

About compostable materials and finished products, APH is determined this will become its long-term growth driving force that contributes a large proportion to its revenue. APH also announced its plan to build the first green materials manufacturing plant in Vietnam.

Compostable materials and finished products – APH’s strategic plan

Environment-friendly products are projected to account for 20-30% of the total plastic consumption globally in the upcoming three to five years. Many countries have come up with policies to promote green consumption, especially in the US and EU. In Vietnam, at the G-20 Summit on June 29, 2020, Prime Minister Nguyen Xuan Phuc said by 2025 Vietnam aims to end the use of disposable plastics. The development of compostable materials and finished products should therefore be the strategic transition expected to make a breakthrough for APH.

“APH will follow the common trend of our era,” said Mr. Pham Anh Duong, APH Chairman, “focusing on green products which will account for the majority of the Corporation’s revenue and profit in the future.”

However, to achieve its goal that compostable products will account for 40-50% in packaging revenue, the company faces three difficulties regarding: production technology, material resources and product costs.

Regarding production technology, in June 2019, APH acquired a 51% stake in Top Leaf Company, a South Korean firm which is one of a few companies in the world owning patent for producing compostable materials, and changed it into AnKor Bioplastics. This means APH is now Vietnam’s first enterprise to hold the patent for manufacturing compostable materials besides BASF, Novamont, NatureWorks etc. At present, APH’s compostable products meet strict international standards such as TUV OK Compost HOME, TUV OK Compost INDUSTRIAL and are present in more than 20 countries worldwide.

After having the patent for manufacturing compostable materials, APH has also announced its plan to build the first compostable material manufacturing plant in Vietnam. Construction for this 20,000-ton plant will start early next year and slated to be completed by the end of 2022.

According to APH, thanks to the initiative in material resources, it is expected that in the next 3-5 years, the profit from compostable bags can increase from 10% currently to about 50% in packaging revenue. Therefore, it can significantly improve APH’s profit margin, as the gross margin of this product line is about 20% compared to the average 14% of conventional packaging, saving production costs about 30% for subsidiaries while the parent company still enjoys a gross profit margin of 25-30% of this project.

Production line of An Phat Holdings.

Listing Vietnam’s leading plastics group on HoSE

In June 2020, APH successfully auctioned 4.3 million shares, equivalent to 3% of the stake, to mobilize capital for the construction of AnBio compostable material manufacturing plant.

The initial public offering (IPO) attracted 109 investors who placed orders for 20.76 million shares, the registered shares are nearly 5 times as many as the selling volume. The average successful bidding price was over US$2 per share, twice as much as the starting price. After the IPO of 3% of its stake, APH gained more than US$9 million and was valued at almost US$281 million.

Accordingly, the IPO offered most of its shares to strategic and long-term financial investors. In 2020, APH plans to issue 20 million shares, equivalent to 14% of the outstanding shares. Currently, APH is working with nearly ten foreign financial and strategic investors from South Korea, Japan and Germany and some other multinational institutions.

As the total capital needed for the PBAT compostable material manufacturing plant is over US$70 million, APH plans to call for 50% capital from owners’ equity and 50% from borrowed capital. In 2020, the company seeks to raise about 80% of the needed capital while the remaining 20% will be raised next year mainly from commercial loans or straight bonds.

APH’s long-term goal is to list all member companies on the stock exchange.

On July 28, An Phat Holdings was officially listed on the Ho Chi Minh City Stock Exchange (HoSE) with ticker symbol as APH. HoSE is the Vietnam’s most prestigious stock exchange. This chronicles another milestone for APH’s development, which opens up more opportunities for mutual cooperation and asserts the position of Southeast Asia’s biggest bioplastics group in the coming time. 

Read more:

Chairman Pham Anh Duong, An Phat Holdings: We will conduct strategic plans in 2020

An Phat’s achievements one year after investing nearly VND800 billion in abandoned IP

Source: https://english.thesaigontimes.vn/77799/an-phat-holdings-on-the-way-to-becoming-aseans-biggest-bio-plastics-group.html

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Intel plans to expand investment in Vietnam

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American technology company Intel has plans to broaden business and investment activities in Vietnam following the country’s good management of the COVID-19 pandemic, the Vietnam Government Portal (VGP) quoted Intel CEO Patrick Gelsinger.

The Intel executive made the statement at a meeting with Vietnamese Prime Minister Pham Minh Chinh in Hanoi on Friday.

Vietnam is an attractive destination for foreign investors as it is a vibrant economy and a promising market, CEO Gelsinger said.

He highlighted that Vietnam remains a charming investment destination in the eyes of foreign investors thanks to its dynamic economy, potential market, and industrious population.

He appreciated the Vietnamese government’s efforts in creating favorable conditions for foreign investors, particularly its support for Intel to maintain production amid the pandemic time.

Chinh, who visited Intel’s headquarters in California earlier this month, praised semiconductor chip manufacturer’s investment activities in Vietnam over the past 15 years.

Intel’s assembly and test factory, located in Saigon Hi-Tech Park in Ho Chi Minh City, became the U.S.’s biggest high tech project in Vietnam.

Since it came into operation in 2010, the factory has generated hundreds of jobs and consolidated Vietnam’s status in the global semiconductor supply chains.  

Chinh recommended that Intel build a research center in Vietnam and assist the Southeast Asian nation in building up a startup and innovation ecosystem and high-quality workforce.

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Source: https://tuoitrenews.vn/news/business/20220528/intel-plans-to-expand-investment-in-vietnam/67342.html

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E-bike buyers face serious sticker shock amid rising gasoline prices

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Increased fuel prices are wreaking havoc across the transportation industry in Vietnam as costs of once wallet-friendly alternatives, such as e-bikes, ride-hailing services, and budget airlines all steadily rise as a result.

To combat the problem, the government is considering proposals to cut taxes on gasoline and oil, according to the National Assembly (NA).

Ripple effect

Nguyen Tri, sales manager for electric bike brand PG, explained that the increased price of e-bikes and e-scooters is due to the rising costs associated with transporting the bikes to sales outlets and distributors.

According to Tri, PG had resisted raising rates at the beginning of the year despite spare part shortages and rising transport costs, but once fuel in Vietnam surpassed VND30,000 (US$1.28) per liter and transport operators hiked fees by 10 percent in March, the firm was left with no choice.

“The increased prices of input materials, such as aluminum, steel, and electric wires have forced the prices of spare parts up by 10 to 20 percent,” Tri explained, adding that the hike in fuel prices has left an enormous impact on the firm’s post-pandemic recovery.

The freight industry has faced the same fate.

Nguyen Kim Thanh, director of Kim Phat Transportation Company in District 12, Ho Chi Minh City, said that record-high fuel costs are creating serious struggles for her firm as it attempts to renegotiate with customers. 

The on-demand delivery sector is also confronting woes as a result of the rising cost of fuel, coupled with a decrease in demand, with Grab, GoJek, and Be drivers all struggling to earn a living.

Many are now considering looking for new jobs, including Nguyen Phuc Bao Chau, a student from Bach Viet College in Ho Chi Minh City, who is a part-time delivery worker.

“I am thinking about quitting my current job and seeking a new one because of soaring gasoline prices and sluggish demand,” Chau said.

More expensive fuel has also placed an undue burden on local airlines, including Vietnam Airlines, Vietjet Air, Bamboo Airways, and Vietravel Airlines.

A commercial deputy director of a local air carrier told Tuoi Tre (Youth) newspaper that airlines’ business operations remain slow although the aviation sector is showing positive signs of recovery.

Some nations are still limiting the number of air passengers aboard inbound flights, in some cases lowering flight capacities by up to 50 percent.

This, along with rising gas prices, is putting serious pressure on airlines.

If jet fuel continues being traded at $130 per barrel in 2022, the cost will add VND5.7 trillion ($245 million) over the course of the year, according to local airlines.

That number will jump to VND9.12 trillion ($392 million) if jet fuel hit $160 per barrel.

The way forward

Speaking about inflation, NA deputy Nguyen Manh Hung from Can Tho City, a permanent member of the NA Economic Committee, told Tuoi Tre that the spike in petrol and oil prices has become a hot topic as it stokes fears of high inflation.

To keep inflation under control, it is vital to reduce excise taxes on gasoline and oil.

In addition, it is urgent to refill the country’s petrol and oil reserves, while obstacles facing the Nghi Son refinery, which accounts for as much as 40 percent of the country’s fuel supply, should be removed soon, said Hung.

Fuel inventories at enterprises should also be addressed.

The prices of fuel will only stabilize when there is an abundant supply of gasoline and oil.

Furthermore, accelerating fuel rates have make food and foodstuffs more expensive. The prices of food are forecast to jump to over 20 percent in the near future.

The NA Economic Committee shared its support for the government’s plan to keep inflation below four percent and requested a clearer scenario for it amid economic growth.

The country’s economic growth target of 6-6.5 percent, plus relief packages for post-pandemic recovery, is expected to drive up inflation.

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Source: https://tuoitrenews.vn/news/business/20220528/ebike-buyers-face-serious-sticker-shock-amid-rising-gasoline-prices/67332.html

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Banks promote lending to exporters amid Việt Nam’s positive shipments

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Workers process shrimp for export at a firm in the South. Total outstanding loans in HCM City by the end of April 2022 reached more than VNĐ3 quadrillion, of which about VNĐ196 trillion was poured into the Government’s priority areas, including exports. — Photo thoibaonganhang.vn

HÀ NỘI — Commercial banks have stepped up lending to export firms, especially those in industrial parks and export processing zones, as exports of many goods have grown strongly this year.

Nguyễn Đức Lệnh, deputy director of the State Bank of Vietnam (SBV)’s HCM City branch, said total outstanding loans in HCM City by the end of April 2022 reached more than VNĐ3 quadrillion (US$130 billion), of which about VNĐ196 trillion was poured into the Government’s priority areas, including exports.

According to Lệnh, the loans have helped many firms in industrial parks and export processing zones maintain production and business. The credit growth for the firms reached 24.4 per cent in Q1 2022, a fairly high level compared to the average credit growth of the whole banking system.

Hứa Quốc Hưng, head of the Management Board of HCM City Export Processing Zone and Industrial Park Authority (HEPZA), said HEPZA has conducted many surveys on credit demand, ability to access capital, and financial sources for firms in industrial parks and export processing zones so as to propose to the SBV and commercial banks appropriate policies. 

According to Hưng, lending to firms has been effective, helping them maintain production and business during the peak period of the pandemic and recover right after HCM City reopened.

In other cities, the lending to manufacturing and export has also increased.

Nguyễn Thái Minh Quang, director of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank)’s Bình Dương Province branch, said the bank is currently still maintaining an interest rate reduction policy of 0.5-1.5 per cent per year for corporate and individual customers. Vietcombank’s Bình Dương Province branch has lowered interest rates for 87 per cent of loans of corporate and individual customers.

Võ Văn Bửu, director of Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank)’s Bình Dương Industrial Park branch, said the bank has launched many preferential loan programmes, which are exclusive to manufacturing and export areas. Thus, firms in the areas have many opportunities to access loans with low interest rates to serve their production and business needs.

Private and foreign banks are also accelerating capital financing for manufacturing and export firms to capitalise on the strong recovery of export activities, especially in textile and garment, agriculture, fishery and processing industries.

A representative of ShinhanBank in HCM City said the bank is currently lending well in industrial parks and export processing zones, with outstanding loans of some $30 million at a preferential interest rate of about 7.5 per cent per year in the first one to three years. The loans to firms in industrial parks and export processing zones are continually growing well as the bank is expanding to other provinces and cities with many industrial zones.

Meanwhile, domestic banks such as HCM City Development Commercial Joint Stock Bank (HDBank), Vietnam Prosperity Commercial Joint Stock Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank) and Orient Commercial Joint Stock Bank (OCB) have also boosted financing for export firms.

TPBank, for example, has launched a loan package worth VNĐ1 trillion for firms to develop livestock farms with an interest rate of 8 per cent per year, while HDBank applied a preferential loan package of VNĐ1 trillion until mid-2022 to finance salary payments for corporate clients with interest rates from 6.8 per cent per year.

Along with the strong recovery of domestic firms after successfully controlling the pandemic, it is expected that banks’ credit will continue to be poured into production and business areas to recover the economy in many cities and provinces in the near future. —

Source: https://vietnamnews.vn/economy/1205751/banks-promote-lending-to-exporters-amid-viet-nams-positive-shipments.html

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