In for a penny: Hoa Phat reaches for top in diversification
In for a penny: Hoa Phat reaches for top in diversification
Vietnam’s animal feed market has become something of a top attraction, with several leading businesses increasing (their) investment in the sector.
Hoa Phat Group, which holds a 20 per cent stake in the domestic market for construction steel, has launched its third animal feed company in a bid to diversify its operations.
The company in question, Hoa Phat Animal Feed Dong Nai, has the chartered capital of VND200 billion ($9.2 million) and is located at the Long Khanh Industrial Park in the southern province of Dong Nai.
Tran Dinh Long, chairman of Hoa Phat Group, said that the new company would produce and process food for domestic animals, poultry and fish, and would have the designed capacity of 200,000 tonnes per year.
Long added that for the near future the group would focus its investment across two sectors, namely steel and animal feed.
In this March, Hoa Phat set up its second animal feed company with the charter capital of VND300 billion ($13.7 million) in the Pho Noi A Industrial Park in the northern province of Hung Yen.
The facility is scheduled to start operations in early 2016 with the annual capacity of 300,000 tonnes. The company has set a revenue target of VND3 trillion ($140.7 million) over the next three years, during which time more factories within the chain will be inaugurated.
According to Hoa Phat, the turnover from the animal feed sector is expected to reach VND800 billion ($36.7 million) for this year alone.
Late this April, Masan Group, one of Vietnam’s largest private sector companies has acquired 52 per cent in Vietnam French Cattle Feed JSC and 70 per cent in Agro Nutrition Company JSC by purchasing Sam Kim Co. Ltd and renaming the company Masan Nutri-Science.
The acquisition and establishment of Masan Nutri-Science instantly places the group on a leading platform to serve the growing $6 billion animal feed sector. Proconco and Anco, as a combined business, is the number one external pig feed and overall second animal feed player in Vietnam. In 2014, it supplied farmers with over 1.7 million metric tonnes of animal feed products, and is on track to deliver its revenue target of $1 billion in 2015.
Danny Le, CEO of Masan Nutri-Science, said that Masan saw a market gap in the food and beverage sector some years ago and now the company is focusing on the similar demand in Vietnam’s animal protein sector. “I am confident that we can fulfil this unmet demand just as we did in the food and beverage sector.”
Proconco is the first joint venture between France and Vietnam in the feed manufacturing sector. Known commonly as “Con Co”, it is Vietnam’s oldest feed brand and has a premium status in this market. Proconco’s total capacity in 2014 was 1.4 million tonnes. Meanwhile, Anco is a Malaysian-Vietnamese joint venture with its first feed factory commissioned in Dong Nai. Anco’s total capacity in 2014 was 750,000 tonnes.
According to the Vietnam Animal Feed Association, the compound feed industry in Vietnam has grown at a rate of 13-15 per cent per annum.
In total, out of the 200 animal feed producers in Vietnam, 70 per cent of the market share belongs to a small number of FDI companies including CP Group (Thailand), Cargill (USA), De Heus (The Netherlands), Proconco (France), and New Hope (China). Many of them are planning to expand their businesses in Vietnam, as the current production only meets a third of the domestic demand.
