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Investors reduce Hoa Phat holdings

Released at: 11:48, 09/07/2016

Investors reduce Hoa Phat holdings

Photos: VinaCapital/Duc Anh

VinaCapital and Vietnam Investment Property Holdings conduct recent share sales.

by Quynh Nguyen

The VinaCapital-managed Vietnam Opportunity Fund (VOF) and Vietnam Investment Property Holdings Limited have sold 1.03 million and 550,000 shares, respectively, in the Hoa Phat Group (HPG).

According to an announcement from HPG, VOF’s ownership falls from 5.21 per cent to 4.99 per cent with the sale and it is no longer a major shareholder.

A communication officer with VinaCapital, told VET that announcement documents on the transaction have been sent to the Ho Chi Minh City Stock Exchange and to HPG.

“The sale of HPG shares is just a regularly activity in updating Vinacapital's investment portfolio,” she told VET. “VinaCapital still appreciates the development potential of HPG.”

In August 2015 Mr. Andy Ho, Executive Director and Chief Investment Officer at VinaCapital, resigned as a member of the board at HPG.

Some foreign funds have also sold large amounts of HPG shares recently. In June, Private Equity New Markets II under PENM Partners, an independent Danish private equity company offering equity capital and strategic partnerships to unlisted Vietnamese companies, sold 8 million shares in HPG.

In mid-2015, foreign funds including VinaCapital, Deutsche Bank, and Dragon Capital reduced their holdings. Foreign investors now hold 36 per cent of shares.

Some investors say that foreign funds are fleeing HPG while others say it is part of investment restructuring and is nothing specifically connected to the Group.

HPG’s revenue in 2015 stood at $1.2 billion and after-tax profit VND3.5 trillion ($155.5 million). Steel production made the largest contribution to revenue and profit, with 79 per cent and 82 per cent, respectively. 

Starting last year HPG has made many changes to its strategy, deciding to invest in agriculture, particularly livestock feed production. It also invested further in coated steel sheets, in which it has long dominated the market.

Early this year it established the Hoa Phat Agricultural Development Co. in the field of animal husbandry and feed production, with charter capital of VND2.5 trillion ($111.1 million). The project’s objective is to create a closed feed chain for the group’s livestock and to supply feed to the market.

The company has imported 500 pigs from Denmark for breeding and anticipates providing clean pork to the market in 2018. By 2021 it targets having over 1 million pigs around Vietnam. It has also spent millions of dollars on building a farm to prepare for importing 3,000 heads of cattle from Australia next month.

HPG has promoted its investment in animal feed with the aim of claiming market share form dominant foreign groups such as CP, Proconco, New Hope, Cargill, and Green Feed.

Despite diversifying its business lines, HPG still promotes its core businesses. It recently began construction of a factory producing coated steel sheets with a capacity of 400,000 tons per year, which is expected to come into operation in 2018.

For 2016 it targets revenue of VND28 trillion ($1.25 billion) and after-tax profit of VND3.2 trillion ($142.2 million).

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