An Phat (AAA) green subsidiary sets profit target of $219m
An Phat Plastic & Green Environment Joint Stock Company (AAA – a member company of An Phat Holding Group, the largest exporter of thin-film packaging in Southeast Asia – has targeted earning revenue of VND10 trillion (US$431 million) and after-tax profit of VND510 billion ($219 million) this year.
These figures would represent 125 per cent and 283 per cent year-on-year increases, respectively.
The information was released at the companys annual shareholders meeting in the northern province of Hai Duong yesterday.
Last year, the company posted a revenue of more than VND8 trillion, exceeding its target by 35 per cent. Its after-tax profit was VND180 billion, meeting 55 per cent of its target.
Pham Anh Duong, the companys chairman, said its revenue in 2018 surged due to the expansion of its production and business activities. The main contribution to the high revenue was due to increased capacity at its two packaging plants and plant that produces stone powder and plastic additive CALBEST.
Duong said its profit in 2018 was lower than that of 2017 despite the higher revenue because some important trade contracts with local partners were delayed until 2019. In addition, the firm did not increase its products prices despite higher input costs because it hoped to expand to new markets and grow its customer network.
In 2018, the company also bought Viet Hoa-Kenmark Industrial Park (IP) from a Taiwanese investor after it sat uninhabited for 10 years. The 46-hectare IP was renamed An Phat Complex. An Phat poured nearly VND800 billion into the complex, temporarily cancelling out its profits in 2018.
“An Phat has been investing to prepare for a strong growth period both in revenue and profit in 2019,” Duong said.
The board of directors proposed deducting 75 per cent of profit in 2018 to compensate for previous production expansion loans. They also asked shareholders if they could not pay dividends in 2018.
The shareholders meeting also approved a plan to issue 8.5 million shares under the Employee Stock Ownership Plan (ESOP) programme at a price of VND10,000. VND85 billion from ESOP issuance will be added to its working capital.
Shareholders also approved allowing An Phat Holdings Group to increase its ownership at AAA to a maximum of 51 per cent by issuing shares or buying shares from existing shareholders, without going through a public bid.
It would continue to invest in completing the An Phat Complex to reach an occupation rate of 40 per cent this year. It plans to build an environmentally friendly plastic and packaging factory in the US.
It plans to pay dividends of between 10 and 20 per cent in 2019 in cash.
Targeted green product development
The chairman said the company targeted making fully biodegradable plastic bags, polyethylene (PE) bags and other environmentally friendly plastic products a big portion of its revenue and profit.
“Currently there are not many businesses making this product line,” he said. “Most of them are small scale and not yet large. Production of fully biodegradable plastic bags accounts for 10 per cent of An Phat's structure but will increase when we expand our production in the domestic market.”
However, he said that to develop the products to replace traditional nylon bags, it would take many steps. These include improving technology to reduce costs and changing consumer awareness.
“This is our decision to match the worlds general trend, which is to use green eco-friendly products,” he said. “This is also a concern and highly recommended by the Government for use in Vietnamese consumer channels to limit the problem of plastic waste pollution”.
The company also decided to rename to AnPhat Bio Plastics Joint Stock Company to suit the trend with the aim of bringing sustainable value to customers and investors.