VietNamNet Bridge - Some foreign conglomerates are conducting negotiations to buy a 100 percent stake of a series of Vietnam’s plastics companies, accepting to pay high prices to take over the companies.

 

 

 

An analyst commented that Vietnam’s plastics companies, sooner or later, will fall into foreigners’ hands, and they will either have to sell or be swallowed by foreign groups.

One of the reasons that foreign investors eye Vietnam’s plastics companies is the high potential of the industry in Vietnam with the second-fastest growth rate in South East Asia.

According to Dinh The Hien, head of the HCM City Applied Economics Research Institute, Vietnam’s plastic industry has been maintaining a 20-25 percent per annum growth rate for many years, a high growth rate which even Thailand and Singapore cannot reach.

Plastics consumption was still very satisfactory in 2014, even though the real estate market had not fully recovered.

Dong A Plastics, for example, reported net sales of VND1.108 trillion in 2014 and the post-tax profit of VND29.6 billion, fulfilling 105 percent of the yearly plan.

Meanwhile, Nguyen Hoang Ngan, deputy chair of Binh Minh Plastics, said Binh Minh has a prosperous year in 2015 and expects the highest growth rate in five years.

In 2014, Binh made a profit of VND481 billion and in the first nine months of the year, it recorded VND468 billion. The business performance has been going smoothly thanks to the input material price decreases.

Rang Dong Plastics has also reported satisfactory post-tax profit of VND13.5 billion which is 192.75 percent higher than that of the same period last year.

Tien Phong Plastics made a post-tax profit of over VND170 billion in the first six months of the year, up by 13 percent over the same period last year.

Trinh Chi Cuong, general director of Dai Dong Tien Plastics, said the company hopes it can increase export turnover to $20 million. Its factory in Nhon Trach is being expanded which is expected to become operational early next year.

However, analysts, though admitting the great potential of the plastics industry, have warned that Vietnamese plastics companies will face a lot of challenges in the time to come due to their limited capability.

The HCM City Plastics and Rubber Association has found after a three-month survey that 95 percent of Vietnamese companies cannot satisfy the requirements in prices, 90 percent cannot satisfy the requirements in technology and 90 percent in corporate governance.

Therefore, analysts believe that many Vietnamese plastics companies would be swallowed by foreign groups which now lust for the high growth rate of the Vietnamese market. SCG from Thailand, which runs 21 companies in Vietnam, is one of them.

DNSG