VietNamNet Bridge – Tribeco is believed to be the victim of a transfer pricing strategy or the tricks played by foreign partners who have been planning a hostile takeover of the drink manufacturer.

Tribeco was once a very famous brand in the drink industry in Vietnam. Tribeco’s products were once nominated as the key industrial products of HCM City, while Tribeco’s shares (TRI) were hunted by big investment funds such as VinaCapital or PXP Vietnam Fund.

However, the golden age of Tribeco is over, since the day its shares fell into the hands of foreigners. The company has asked for the permission to leave the stock market, before it is forced to cancel the share listing. Analysts believe that Tribeco, like many other strong brands, would disappear from the market after it is controlled by foreigners.

The pinnacle and the abyss

Tribeco’s products were listed as “Vietnamese high-quality goods” in 11 consecutive years and sold very well on the market. Tribeco maintained good business performance and paid the high stable dividend of 18 percent per annum. Tribeco was well known as the sponsor for the HCM City TV bicycle tournament Cup.

In 2005, Kinh Do sweets group became a big shareholder of Tribeco after it purchased 35 percent of stakes from foreign investment funds.

At that time, Tran Le Nguyen, General Director of Kinh Do Group said on local newspapers that by injecting money in a strong brand in the drink sector like Tribeco, Kinh Do would be able to “take a shortcut” to penetrate the drink market.

After that, Tribeco found a new “dream boy” – Uni President, a Taiwanese food group. However, Tribeco surprised investors when it reported the 145 billion dong loss in 2008.

In order to rescue Tribeco, the two big shareholders injected hundreds of billions of dong in the company. However, the effort failed to bring effects, while Tribeco continued reporting the loss of 82 billion dong in 2009.

The downturn continues with the reported loss of 86 billion dong in 2011. Especially, at the shareholders’ meeting held earlier this year, Tribeco “asked for the permission from shareholders” to suffer a loss of 140 billion dong in 2012.

Tribeco has been sliding in doing business since 2008, incurring big loss in 12 out of the 13 quarters. Foreign investment funds, such as Citigroup Global Market, Vietnam Investment Limited, though affirming their intention to make long term investment in Vietnam, also decided to run away from Tribeco.

Tribeco forced to take loss to serve a takeover attempt?

The annual shareholders’ meeting held in June recognized the power transfer, when three senior executives of Kinh Do quit the board of directors, giving the seats to the representatives from the foreign partner Uni President.

While the bad corporate governance has been cited as the main reason behind the poor business performance of Tribeco, analysts have also posed a question about the role of the foreign big shareholder Uni President. After buying 15 percent of stakes of Tribeco in 2007, the Taiwanese group continued buying more shares, now holding 43.56 percent in Tribeco.

Ngo Nhu Diem from Vietstock, a stock analysis firm, has noted that while the sales have been increasing steadily, Tribeco still has been incurring loss. The average margin in the drink industry is about 20 percent, which is higher than other sectors. The prolonged bad business performance remains a big question.

Nguyen Thi Ngan Tuyen from KimEng Securities Company also said that Tribeco’s loss is really enigmatic. No measures have been taken to revive Tribeco, even though the leadership is really experienced. Uni President has succeeded with its instant noodle products in Vietnam, and no one can say it is inexperienced enough in the field.

Therefore, analysts have every reason to have doubts that Tribeco is the victim of a transfer pricing strategy or the tricks played by foreign partners who have been planning a hostile takeover of the drink manufacturer.

Doanh Nhan Saigon