Despite bananas and durians already generating trillions of dong in annual profits, Doan Nguyen Duc, widely known as Bau Duc, says Arabica coffee will become HGI’s largest crop and reshape the company’s revenue structure within the next two years.
Duc made the remarks on August 18 at an event introducing investment opportunities in Hoang Anh Gia Lai International Investment JSC (HGI), one of the key profit-generating businesses in his corporate ecosystem.
At the event, Duc said HGI’s core strategy for the coming years would be to concentrate resources on Arabica coffee.
He noted that Arabica commands a significant price premium, currently approaching VND200,000 ($7.60) per kilogram, compared with VND98,000-100,000 ($3.72-3.80) for Robusta. The company is completing a processing plant scheduled to be ready in October this year, ahead of its first harvest next year.
Doan Nguyen Duc, chairman of HAGL, speaks at the event. Photo: Thu Ha.
Duc expects coffee to begin making a major contribution to revenue from October 2027. HGI also plans to expand its coffee-growing area from the current 2,400 hectares to 20,000 hectares next year, with a longer-term target of 26,000 hectares.
Duc acknowledged that two or three years ago, the company did not have sufficient capital to develop large-scale coffee plantations. With its finances now more stable and access to well-positioned land in Laos, HGI plans to commit substantial resources to turning coffee into a major growth driver through 2029.
With this investment, Duc expects the group’s revenue and profit mix to shift significantly over the next two years. Coffee is projected to rise to first place, followed by durian and then bananas - reversing the current order of bananas, durians and other crops.
Alongside coffee, investors and media representatives raised questions about the company’s durian export prospects as India takes initial steps toward opening its market to Vietnamese agricultural products.
Duc remained cautious.
“India’s market of 1.4 billion people would represent an enormous opportunity if it fully opens to official imports, helping raise the value of Vietnamese durians. However, moving from policy discussions to completing protocols and phytosanitary standards, and establishing sea and air logistics chains, will take time - at least another one or two years. Once that is completed, we will certainly explore the opportunity,” he said.
The HAGL chairman said that, for now, durian supplies from both Vietnam and Thailand are still insufficient to fully meet demand from their traditional Chinese market.
As one of the companies with a large durian-growing area in the region, HAGL is closely monitoring trade negotiations. But rather than rushing into new markets, the company will focus first on optimizing productivity and quality across its existing plantations.
Duc explains narrowing profit margins
An investor asks Doan Nguyen Duc about the company’s shares. Photo: Thu Ha.
At the event, Duc also surprised many investors by making firm commitments on profit distribution once HGI completes its listing procedures.
He said that next year, after the listing is completed, HGI plans a 1-for-1 share issuance, equivalent to 100%, together with a 50% cash dividend.
According to Duc, with charter capital of VND1.8 trillion (about $68.4 million) and profit of nearly VND2.9 trillion ($110.2 million), expanding the company’s share capital is a logical step in restructuring its capital base.
Although no formal decision has yet been made, Duc said HGI is considering the 1-for-1 share plan alongside a 50% cash dividend. He said the proposal is expected to make the stock more attractive to investors.
Duc added that the proposed offering price of VND60,600 ($2.30) per share was determined based on the company’s operating performance and outlook. HGI’s management expects the coffee project to contribute to growth in the years ahead.
Addressing questions over a decline in the subsidiary’s gross profit margin in its financial statements, Duc said HGI recorded VND1.6 trillion ($60.8 million) in revenue from internal trading activities.
That revenue was booked at cost without generating profit, thereby lowering the average profit margin calculated against total revenue.
According to Duc, when individual business segments are examined separately, the company’s underlying profitability continues to improve.
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