ty le keo bong da toi nay recently successful Initial Public Offering (IPO) is just ty le keo bong da toi nay first step of An Phat Holdings (Ticker symbol: APH) in ty le keo bong da toi nay company’s plan to mobilise capital for AnBio compostable material manufacturing plant. ty le keo bong da toi nay project will put APH on ty le keo bong da toi nay list of one of ty le keo bong da toi nay few enterprises in ty le keo bong da toi nay world such as BASF, Novamont, NatureWorks, Total Corbion … that capable in producing compostable materials.
- APH – ty le keo bong da toi nay noteworthy stock IPO during Covid-19 outbreak
In an interaction with media, Mr. Dinh Xuan Cuong, Vice Chairman and Chief Executive Officer (CEO) of APH proudly said that this will be ty le keo bong da toi nay first compostable material manufacturing plant in Vietnam that would be able to supply “green” materials for both domestic and international production.
When AnBio project is completed in 2022, APH will fully take ty le keo bong da toi nay initiative in production inputs, while reducing product’s cost to create more competitive advantage. In ty le keo bong da toi nay context that ty le keo bong da toi nay market of compostable products is expected to accelerate in ty le keo bong da toi nay next few years to replace disposable plastic products, this is considered an important strategic move of ty le keo bong da toi nay largest green materials manufacturer in Vietnam.
To have a more comprehensive view, ty le keo bong da toi nay reporter had an interview with ty le keo bong da toi nay Vice Chairman and CEO of APH.
As seen, ty le keo bong da toi nay registration for your last IPO auction was nearly5 times higher than your expectation , ty le keo bong da toi naybidpriceis 2 times higher than initial one. Maybe, bothof you & BoD were really surprised with this result?
– We were not surprised with ty le keo bong da toi nay auction results, but we impressed with ty le keo bong da toi nay number of auction registrations that nearly 5 times higher than ty le keo bong da toi nay selling volume. Prior to ty le keo bong da toi nay IPO, many investors who participated in this auction had earlier discussed and worked with APH. Therefore, we foresaw ty le keo bong da toi nay price they were willing to pay.
In ty le keo bong da toi nay recent IPO, APH has been highly priced. It can also be seen that many investors are interested in APH’s stock and AnBio compostable material manufacturing plant. That is a good sign.
Calculation methods indicate that ty le keo bong da toi nay book value of An Phat Holdings as of December 31, 2019 at only VND 15,300, while other calculating methods point out market value of An Phat Holdings at around VND 23,800 per share. So, in your opinion, what are ty le keo bong da toi nay reasons for investors to pay more than VND 50,000 per share, much higher than ty le keo bong da toi nay valuation of ty le keo bong da toi nay other companies in ty le keo bong da toi nay same industry?
-According to ty le keo bong da toi nay statistics of ty le keo bong da toi nay listing consultant, ty le keo bong da toi nay average P/E ratio of ty le keo bong da toi nay domestic and regional plastic industry is about 11.17x. With 2019 EPS is VND 3,433 per share, based on ty le keo bong da toi nay company’s P/E ratio, ty le keo bong da toi nay valuation of APH is VND 38,344 per share. However, I believe that investors buying a stock not only based on historical data but also its future prospect. Therefore, when investors paid more than VND 50,000 per share, it represents investors’ confidence in ty le keo bong da toi nay growth prospects of APH as well as our subsidiaries.
Though securities market now has recovered slightly, but it is still very unpredictable. In ty le keo bong da toi nay past, there were many successful IPO with high bid prices, but when listed, ty le keo bong da toi nay stock price will plunge in ty le keo bong da toi nay first few session. What is your opinion on this matter?
-Listing immediately after ty le keo bong da toi nay IPO is an usual and common activity in developed stock markets to mitigate ty le keo bong da toi nay risk after investors participating in ty le keo bong da toi nay IPO, so that they can trading stocks as soon as possible.
APH aims to issue and prioritize majority of shares for institutional investors who aim to hold stock for a long-term. We strongly believe that their long-term commitment with businesses will help reduce price variation.
In addition, when AnBio comes into operation, it will contribute significantly to ty le keo bong da toi nay company’s business results.
In stark contrast with other businesses, APH chose to IPO and listing at this sensitive period. In comparison with state-owned enterprise, it seems that equitization activities, IPOs will be delayed due to COVID-19. Sir, what is ty le keo bong da toi nay reason behind this scenery?
-We have a clear goal of raising capital for AnBio plant. Capital from ty le keo bong da toi nay IPO will be retained to increase ty le keo bong da toi nay surplus and value for ty le keo bong da toi nay company. This project is indispensable and crucial in APH’s development plan, thus it is suitable to implement at this time.
Moreover, COVID-19 has been well controlled in Vietnam. Vietnam has also become a bright spot in ty le keo bong da toi nay world after successfully contained ty le keo bong da toi nay pandemic. ty le keo bong da toi nay fewer businesses listed at this time, ty le keo bong da toi nay more prominent we become to lure more investors.
During ty le keo bong da toi nay time combating COVID-19, we still ensure production and business activities. As a result, when ty le keo bong da toi nay pandemic is under control, APH is ready to welcome investors, especially foreign investors, who are increasingly considering Vietnam as an attractive destination.
Sir, as it is known that APH will spend 15.75 million shares to sell to strategic investors. Could you please reveal more information about potential investors as well as their strengths to support ty le keo bong da toi nay company in business operations and market expansion in ty le keo bong da toi nay future?
We spend majority of this issuance for strategic investors while targeting long-term financial investors.
Reputable and experienced long-term financial investors in developed and developing countries will bring long-term, stable financial support to us.
On ty le keo bong da toi nay other hand, strategic investors will offer recommendation about project implementation such as: implementing and working with contractor, reaching potential customers, expanding product consumption markets, technology and operation support.
Currently, APH is working with 7 investors, of which 5 are long-term financial institutions and two strategic investors. Investors are all from foreign countries like Korea, Japan, Germany and some multinational organizations.
- Strategic move to conquer North American market
Sir, as far as I know, APH Board of Directors has had many working trips in ty le keo bong da toi nay US to prepare for ty le keo bong da toi nay plan to develop market for compostable products. Could you reveal what has been achieved and ty le keo bong da toi nay company’s goal in ty le keo bong da toi nay coming time?
We consider ty le keo bong da toi nay US as a huge potential market for ty le keo bong da toi nay development of compostable products. APH has had many working trips with organizations in ty le keo bong da toi nay US, including strategic advisory firm ty le keo bong da toi nay Asia Group.
At present, we have established a company in ty le keo bong da toi nay US and we are forming plan to penetrate this market. In my opinion, social instability is temporary and ty le keo bong da toi nay impact of ty le keo bong da toi nay COVID-19 will not halt ty le keo bong da toi nay medium to long term growth trend of eco-friendly products here.
Sir, might you give an overview of ty le keo bong da toi nay attractiveness of compostable products market in Europe and ty le keo bong da toi nay US, where you have been selling your products?
-Our overseas market has expanded significantly, from 5 countries (in 2019) to more than 20 countries at present, including ty le keo bong da toi nay US, Canada and other European countries. This is a very potential market when these countries tend to switch gradually to environmentally friendly products. Since then, compostable products are perfect replacement.
According to research, in ty le keo bong da toi nay next 3-5 years, environmentally friendly products will account for 20-30% of total plastic products worldwide.
We have solved ty le keo bong da toi nay puzzle for compostable product price in best way. Therefore, in order to catch up with this global trend, we decided to invest in AnBio compostable plant, taking ty le keo bong da toi nay initiative in materials, reducing production cost and creating more competitiveness for APH. Many familiar customers in these markets now have shifted to our compostable products.
ty le keo bong da toi nay potential of ty le keo bong da toi nay North American market as mentioned is enormous. But this is also certainly a very competitive market. Sir, what do you think about ty le keo bong da toi nay opportunities & challenges for APH compared to competitors in this market?
-ty le keo bong da toi nay North American market is larger than both Europe and Japan. Moreover, we can see ty le keo bong da toi nay quick trend shifting to environmentally friendly products here.
At this moment, this market is competing for ty le keo bong da toi nay supply of environmentally friendly products in ty le keo bong da toi nay direction that benefit APH when we are one of ty le keo bong da toi nay few enterprises in ty le keo bong da toi nay world holding ty le keo bong da toi nay patent for manufacturing compostable materials.
Sir, you have just mentioned “ty le keo bong da toi nay patent for manufacturing compostable materials”, so what are ty le keo bong da toi nay outstanding features of this project?
-We will have raw materials self-supply for production from ty le keo bong da toi nay first to ty le keo bong da toi nay last stage instead of importing raw materials from aboard to manufacture finished products.
So, what role will AnBio play in APH production system?
– This will be ty le keo bong da toi nay first compostable material manufacturing plant in Vietnam that can supply and meet ty le keo bong da toi nay demand for both domestic and foreign markets. ty le keo bong da toi nay factory will completely change APH’s position, to be both a producer and a trader of green materials.
There have been a number of large partners in Vietnam coming to APH and questioning ty le keo bong da toi nay trade of AnBio compostable material. Our goal of becoming Southeast Asia’s largest bioplastic group is in ty le keo bong da toi nay near future.
Sir, according to ty le keo bong da toi nay calculation of ty le keo bong da toi nay investment project, what is ty le keo bong da toi nay internal rate of return (IRR) of this project? In comparison with other plastic and packaging projects that APH has invested, are ty le keo bong da toi nay profit margins superior?
-ty le keo bong da toi nay rate of return of ty le keo bong da toi nay project is 36% according to our estimates. Overall, this project is extremely important because it will help increase ty le keo bong da toi nay efficiency of subsidiaries by helping reduce input costs and increase profit margins. ty le keo bong da toi nay rate of return on a (consolidated) perspective of ty le keo bong da toi nay Group is much higher than previous projects.
We are currently importing materials from Europe, manufacture products and then exporting them back to Europe. ty le keo bong da toi nay raw materials self-supply will help APH save production costs about 30% for subsidiaries while ty le keo bong da toi nay parent company still enjoys a gross profit margin of 25-30% of this project.
- Difficulties provide a window of opportunity
Until now, we all know how COVID-19 has negatively impacted on ty le keo bong da toi nay world economy while America is one of ty le keo bong da toi nay most impacted countries and now concerns about ty le keo bong da toi nay second wave of COVID. Thus, APH may encounter many difficulties in ty le keo bong da toi nay coming time. Sir, will epidemics affect ty le keo bong da toi nay progress and investment plan of ty le keo bong da toi nay company?
– It can be said that COVID-19 influences our outreach activities and seeking new customers in this market. But ty le keo bong da toi nay North American development plan is a long-term one, and we believe that Covid-19 will soon be contained here. Furthermore, ty le keo bong da toi nay use of environmentally friendly products is an inevitable trend, so in ty le keo bong da toi nay long-term, there is nothing to be worried about.
Sir, can you disclose about ty le keo bong da toi nay business situation of ty le keo bong da toi nay two prominent subsidiaries (AAA and NHH) in ty le keo bong da toi nay first 6 months. Is ty le keo bong da toi nay influence of COVID-19 significant, especially on AAA’s international trade, or with NHH’s industrial supporting equipment production?-As we mentioned in ty le keo bong da toi nay media earlier, ty le keo bong da toi nay production of AAA has not decreased in quantity, especially ty le keo bong da toi nay compostable products segment is still growing because these are essential consumer products.
Supporting industry is also affected by Covid-19 due to some customers suspending production but we forecast to grow strongly in ty le keo bong da toi nay last 6 months.
What did APH Board of Management do to help subsidiaries overcome difficult times, especially to help them rebound when ty le keo bong da toi nay market recovers?
-I hold ty le keo bong da toi nay belief that “fire proves gold, adversity proves men “, we have nearly 20 years of experience in ty le keo bong da toi nay market, facing many challenges but we overcame those obstacles to grow. I think that, under any circumstances, difficulties provide a window of opportunity. ty le keo bong da toi nay recent successful IPO of APH is a testament to this. During tough times, we have been doing very well. So, there is no reason when ty le keo bong da toi nay market recovers, we could not do better.
Thank you very much.
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