State-owned companies seem to be focusing on the energy sector in Vietnam. PetroVietnam Fertiliser and Chemicals Corporation, a subsidiary of the state-owned oil and gas giant PetroVietnam, is expanding part of its fertiliser factory with an investment of $237 million. Meanwhile, Tan Tien Plastic Packaging JSC, a private business, is facing challenges in operation, mostly due to competition, which might lead to a future delisting.
PVFCCo to expand $237m fertiliser plant
PetroVietnam Fertiliser and Chemicals Corporation (PVFCCo) and a consortium of contractors, including Technip (France), ThyssenKrupp Industrial Solutions (Germany) and PetroVietnam Technical Services, have reached an Engineering Procurement and Construction contract to arrange VND5 trillion ($237 million) for the extended NH3 complex within the Phu My NPK plant.
Under the terms, 30 per cent of the investment capital in the Ba Ria-Vung Tau based complex will be contributed by the investors, while the remaining 70 per cent is raised from bank loans.
The project will increase the capacity of the NH3 from the current 450,000 tons per year to 540,000 tons annually.
The Vietnamese government portal states that the country needs some four million tons of NPK fertiliser each year, but the local high quality products meet only five to 10 per cent of the demand. Thus, the increased production of the NH3 is expected to gradually replace imported fertilisers.
Cao Hoai Duong, chief executive of PVFCCo, hopes the project will be completed as scheduled (to be operated from the second quarter of 2017), and will produce internationally standardised products, thanks to the partnership with the reputable companies.
Tan Tien plans to delist, Dai Tan Long ups stake
Tan Tien Plastic Packaging JSC has agreed to allow Dai Tan Long JSC, a financial service company, to increase its holding to 25 per cent without making any public offer, saying that the shareholder has a great contribution to its business and governance performance.
Dai Tan Long currently holds 24.4 per cent in Tan Tien, which is based in the Ho Chi Minh City in the south of Vietnam.
In addition, the packaging firm is planning to delist from the Ho Chi Minh City Stock Exchange, to “focus on corporate restructuring”.
Tan Tien’s stock price reached VND30,400 ($1.4) on Monday, declining nearly four per cent. In fact, it has been growing strongly over the past month.
The company said it was facing stiff competition in the packaging segment, with the entry of foreign players such as Japan’s Dai Nippon and Fuji Seal. “Unilever, one of our biggest customers, has reduced its orders to us and reached these firms,” Tan Tien unveiled during a meeting on Saturday.
Competition was also the reason the company failed to fulfill its profit target last year. The profit before tax in 2014 reached VND42.8 billion, accounting for only 71 per cent of the goal and decreasing 15 per cent year-on-year.
Meanwhile, Tan Tien said it will promote exports to Japan and other markets in Southeast Asia while trying to retain its presence in Indonesia, Philippines and Thailand.