VietNamNet Bridge – Sugar companies once were considered the “pretty traders” if compared with the big guys in the banking sector. However, nowadays they are the aiming points of many big bankers.

Rapid-fire information has come about the commercial affairs conducted by sugar companies, showing the heat of the sugar industry, from the news about the collection of a sugar company’s shares to take over it, to the fact that Hoang Anh Gia Lai, a “big cheese” in the real estate sector has jumped into the market.

In principle, where there profits can be made, there would be big investors. Therefore, the presence of big investors in the sugar industry showed that this is a profitable investment sector.

The sweetness of 1.3 million tons of sugar

In a sugar market with the impressive gross profit margin of 30 percent like in Vietnam, the control over a big proportion of the total output of 1.3 million tons would bring a great advantage to a small group of enterprises in controlling the prices and the supply-demand in the market.

“You may fail a battle, but you will win the war” is the principle followed by many businessmen. And analysts believe that the saying has some relations to the latest decision by Dang Van Thanh, President of Sacombank, to drop bank shares to hunt for sugar shares.

After withdrawing a part of the capital to Sacombank, accepting the lower influences to the bank, Dang Van Thanh’s family has been increasing their presence in a lot of sugar companies including Bourbon Tay Ninh (SBT), Bien Hoa Sugar Company (BHS) and Ninh Hoa Sugar (NHS).

A report released by the Ha Thanh Securities Company said Vietnam now has some 40 sugar companies. Together with some joint ventures, Lam Son (LSS), Bourbon Tay Ninh (SBT), Bien Hoa (BHS), Quang Ngai and Can Tho Sugar Companies are the ones holding the biggest market shares.

Seven out of the 40 sugar companies are listing their shares on the bourse. Of the seven companies, the operation of SBT, BHS and NHS has been controlled by the group of companies where Thanh’s family members hold controlling stakes.

Besides, through NHS, Thanh’s group of companies – Thanh Thanh Cong and Dang Huynh – now also hold 41.1 percent and 11 percent of stakes of the 333 Sugar Cane and Sugar Company and the Gia Lai Sugar and Thermopower Company, respectively.

One year ago, Thanh’s wife – Huynh Bich Ngoc – revealed that she had stakes of the La Nga and Phan Rang Sugar Companies. The Dang family’s ownership ratios at other sugar companies have not been clarified, but the above said figures are enough to say that Dang family now holds an influential power on the whole domestic sugar industry.

Finance reports show the impressive gross profit of nearly 30 percent. In 2011, the gross profit of Bourbon Tay Ninh was 30 percent, while Lam Son got 29.4 percent and Kon Tum Sugar Company 29.9 percent. Only Bien Hoa Sugar got the modest gross profit of 7.8 percent last year.

Commenting about the move of Thanh to increase his influence in the sugar sector, Nguyen Hoang Bich Ngoc, an analysis expert of Sacombank Securities Company said when covering sugar companies, Thanh Thanh Cong’s activities would be integrated into a closed process, from production to distribution. This proves to be a reasonable step allowing Thanh Thanh Cong to cut down expenses and increase the profits.

It is estimated that nearly 10 sugar companies out of the existing companies bear influences or have relations with the shareholders of Thanh’s family. These are the companies which play a very important role in the sugar industry, making up 32.6 percent of the total sugar output.

DNSG