Duc Long Gia Lai Group targets revenue of $200 million from electronic component manufacturing over next three years.
The Duc Long Gia Lai Group (DLG), one of Vietnam’s largest private concerns, plans to make electronic component manufacturing its strategic business line over the next three years through mergers and acquisitions (M&As).
According to Mr. Bui Phap, Chairman of DLG, electronic component manufacturing will bring the Group revenue of $200 million over the next three years. “DLG is absolutely able to reach this goal thanks to taking advantage of the capabilities of its partners and a stable consumption market,” he said.
To achieve the goal DLG recently conducted M&As with electronics companies from South Korea and Japan that have recorded solid business performance.
Most recently, on April 21, DLG successfully bought Electronic Factory Quality Systems Integrated Corporation (QSIC) and its modern factory on 18,000 sq m at the Saigon High-Tech Park in District 9, Ho Chi Minh City. The factory is now in the process of new equipment installation and will begin production for export in October.
In 2015 DLG merged with the US’s Mass Noble (headquartered in Hong Kong) in a share swap arrangement. The large-scale company is located in the city of Dongguan in China’s Guangdong province and has over 3,300 employees, specializing in producing high-tech electronic products such as high-end LED lights for furniture, cars, streets and highways.
Mass Noble is very stable and has become the representative of DLG in Hong Kong in implementing M&As with electronics companies from Japan, South Korea and elsewhere so it may expand its business. Last month Mass Noble purchased and became the owner of the DLG-Hanbit Co., Ltd, headquartered in Seoul, South Korea.
DLG is a multidisciplinary group with main sectors being agriculture, energy, and infrastructure. Listed on the stock market, DLG has established 22 companies and four affiliates with multi-sector operations and investment in Vietnam as well as other countries around the world.
Besides electronic component manufacturing the group will also focus on real estate developments this year. It will start three projects in Districts 7 and 8 and Binh Tan district in Ho Chi Minh City, with total investment capital of VND4 trillion ($180 million) and providing about 2,500 apartments.
At the end of FY 2015 DLG reported revenue of VND1.6 trillion ($72 million), up 63.6 per cent year-on-year, and pre-tax profit of VND82.8 billion ($3.72 million), up 57.4 per cent. In 2016 it targets revenue of VND2.8 trillion ($126 million) and after-tax profit of VND220 billion ($9.9 million).
In order to take advantage of free trade agreements and the TPP, DLG is continuing negotiations to sign contracts to supply components to major partners in the US (Canon, Azad international, Whirlpool, and Honeywell), South Korea (LG and Hyundai), and Japan (Sony and Panasonic). This will be a crucial step in DLG becoming a major investor in the field of manufacturing electronic components.
According to the General Statistics Office (GSO), in the first six months of this year export turnover in electrical and electronic components reached $7.9 billion, up 7.1 per cent year-on-year.
Although export turnover accounted for one-fifth of the total, it mainly comes from foreign invested enterprises such as Samsung, Microsoft, LG and others.
These large groups have increased their localization rates but Vietnamese enterprises must still import components from foreign countries. Figures from GSO show that import turnover in electronic components in the first six months increased 17.8 per cent year-on-year, mainly from China, with $1.5 billion, followed by South Korea with $771 million.