VietNamNet Bridge - A steel manufacturer invests in an animal feed production project, a real estate firm farms cows, a securities company produces rice, and a retailer grows vegetables.

 

Part 1: Where are investors pouring their money?

In early July 2015, rumors spread that Masan Consumer had taken over Ba Huan, a private enterprise providing poultry eggs in HCM City. 

Ba Huan later denied it. However, people had every reason to believe that Masan Consumer was eyeing Ba Huan. 

Masan has been conducting a series of merger & acquisition (M&A) deals over the last three years, targeting enterprises in agriculture. This is a part of its plan to set up its 3F business model (feed, farm, food). To date, Masan Consumer has had 3F for pork.

Prior to that, at a meeting with HCM City leaders in March 2015, Lee Hae Sun, CEO of CJ CheilJedang Corporation from South Korea, expressed his interest in the equitization of state-owned agricultural enterprises in HCM City. Vissan, the meat supplier, is one of the names it is eyeing.

Vingroup (real estate), Hoang Anh Gia Lai (real estate), Hoa Phat (steel) and SSI (securities) have all expressed interest in agriculture.

Agriculture plays a pivotal role in Vietnam’‘s economy. Seafood, husbandry, sugar refinery and agriculture materials all can promise high added value and good profit margins.

Seafood companies are businesses with a relatively high capitalization value in the stock market, while many M&A deals have been made recently among catfish and shrimp producers.

Over the last 10 years, the industry has been making a great contribution to Vietnam’s exports. In 2014, Vietnam earned $7.84 billion worth of seafood products, an increase of 16.7 percent over 2013.

Meanwhile, the value of the livestock industry has reached $18 billion and is expected to increase further on the improved living standards of Vietnamese people.

The attractiveness of the livestock industry explains why Hoang Anh Gia Lai has poured money into the cow farming project. Though it only began implementing the project in mid-2014, it hopes to earn VND3 trillion in 2015 and VND6 trillion in 2016 in revenue from beef.

Animal feed production, a link of the closed farming model, has also lured investors as the industry is believed to have high value of $6 billion.

Investors have injected money into plant seed production and agriculture materials.

The sectors, as commented by analysts, are ‘lean meat’, the best parts of agriculture which all investors want. Jumping into the sectors through M&A deals is the choice of the majority of investors.

NCDT