An Phat Holdings (APH) has reported an outstanding business performance in the past few years. In 2014, it earned nearly VND1.6 trillion in revenue. The figure is expected to increase to VND12 trillion this year. APH has a plan to launch its initial public offering (IPO) this year to raise capital for its new projects. In a recent interview with The Saigon Times, APH Chairman Pham Anh Duong has shared the company’s plans in the bioplastics sector.
IPO aimed at building a big-ticket plant
Can you share APH’s plan to build a plant worth millions of U.S. dollars?
We have raised capital for a project to build a plant of polybutylene adipate terephthalate (PBAT) since 2019 and will start work on the project next year. The plant, when put into operation, will help An Phat Bioplastics (ticker symbol: AAA), a key subsidiary of APH, produce compostable materials meeting the strictest international requirements on the environment protection. Once AAA can produce materials by itself, the selling prices of its products will be reduced.
The plant will be built within 18 months and completed by 2022, with an annual capacity of 20,000 tons and an investment of nearly VND1.5 trillion. APH sets a target that the revenue from its compostable products will account for 40%-50% of AAA’s total in 2023.
How can the company mobilize capital for the project? Is it from the company’s IPO?
As I have mentioned before, APH has raised capital for the project since 2019. However, many investors have expressed their interest in the company’s IPO, so APH has decided to conduct strategic plans in 2020 by launching an IPO to attract more investors. The company is working with the HCMC Stock Exchange on the IPO plan.
Is the company confident about its plan to raise capital this year when the whole world is facing difficulties?
Despite difficulties in the global market, our sector has not been affected much. On the contrary, AAA has received more orders from partners in America and Europe for its packaging products, bags, knives, spoons and forks as these are essential products for daily life. Thus, there is no reason for us to worry about this project.
APH has raised its foreign ownership cap to 100% and is working with some investors on their ownership in the company.
APH has been active in multiple sectors, including compostable products, supporting industries, packaging, logistics, etc. So what is the key sector contributing enormously to APH’s growth?
APH has developed a closed ecosystem by taking the initiative in its input materials and outputs. AAA, which produces packaging and compostable products, accounts for almost 90% of APH’s revenue.
About compostable products, we have AnEco which are trusted by many prestigious restaurants, hotels nationwide or on shelves of several supermarkets. The products have been also exported to several countries as they meet European standards.
For input materials, we cooperate with a South Korean partner, one of the five companies in the world holding the patents on compostable materials. Thus, APH has become the unique enterprise in Vietnam to produce materials for such products. The building of the PBAT plant is aimed at reducing the selling prices of our compostable products.
In the packaging sector, APH has developed subsidiaries. Of which, AAA is the producer, An Tien Industries is the provider of materials, and An Thanh Bicsol trades those materials and products.
Regarding the supporting industries, APH has set a target to develop a value chain in the plastics industry and become a leader in the supporting industries in Vietnam. APH owns five companies serving its plan to take part in the global value chains, including Hanoi Plastics JSC, VinFast-An Phat Plastic Auto Part Co., Ltd, Viexim Import-Export Development Investment Co., Ltd which supply auto and motor spare parts; An Trung Industries, which provides plastic accessories for the electricity and electronics sector; Vietnam Pattern Manufacture and Precision Mechanical Co., Ltd, which produces molds;
Ideal opportunity to expand market
With the plan to build the PBAT plant, how will the initiative in materials helps APH develop sustainably?
We are determined to develop APH into a leading hi-tech and environmentally friendly plastics group in Southeast Asia. All the product development, production and business expansion plans must be aligned to this goal. The IPO and the PBAT plant project will help us take the initiative in input materials, which is the key to APH’s sustainable development in the coming periods.
About the market trend, in order to reduce the use of disposable plastic products, the Government will hike the environment protection tax rates on enterprises producing these products, hereby raising the prices. Meanwhile, when we take the initiative in input materials, the selling prices of compostable products will be cut and the price gap with common plastic products also be narrowed and consumers will be willing to use environmentally friendly ones.
APH is the first enterprise in Vietnam to successfully produce compostable products meeting international standards. What is the company’s strategy in the local market?
In Vietnam and the world as a whole, the green consumption trend is developing strongly. Japan, South Korea and European, American countries have had plans to ban disposable plastic products, which are seriously harmful to the environment.
In Vietnam, the Government is also working on a plan to reduce consumption of single-use plastic bags in supermarkets, restaurants and markets, so this is a potential market for APH.
We are focusing resources on the domestic market and expects the Vietnamese market will contribute 15% of the firm’s total production revenue by 2023.
How will APH access new partners in the supporting industries?
We have a plan to increase the number of accessories provided to existing partners. For example, we produced just a few accessories for Toyota 10 years ago but 30 ones at present. When manufacturers tend to enhance the localization rates of their products, we will have more orders to boost the manufacture of accessories for those partners.
In addition, the company will access new partners. As we have cooperated with several multi-national corporations such as Honda, Toyota, Samsung, LG and Panasonic, we will have more opportunities to work with other new partners.
APH has recently ventured into the industrial real estate sector. Will the company develop other industrial parks or only the 45-hectare An Phat Complex?
Currently, the sector is potential due to foreign firms’ shift of production lines from other countries to Vietnam.
Especially, the trend seems to be stronger after the Covid-19 outbreak. Some partners have worked with us on land leasing. In the second quarter of this year, APH has transferred some land lots and will continue transferring the remaining land lots in the An Phat Complex until the end of 2020.
Besides the An Phat Complex, we will invest in the Quoc Tuan-An Binh industrial park project, which will be 180 hectares large. We will clear the site for the project at the end of this year and put the project into commercial operation next year.
The “China +1” trend is widely mentioned currently, what will APH do to catch these opportunities?
Both An Phat Complex and Quoc Tuan-An Binh industrial parks are located on the ideal positions in the northern key economic region, which is attractive to investors.
Particularly, we offer one-stop services for all customers. APH, with experienced consultants, will support customers in finance, human resources, supporting industries, administrative procedures, business registration, customs and logistics.
Our long-term objective is to develop these two industrial parks into hi-tech and eco-friendly complexes.
What is the company’s ambition in the next 5 years?
In 2016, AAA set a target to become the largest plastic packaging producer in Southeast Asia and it has achieved this target. Our next targets are to become the largest bioplastics group in the region in the next three to five years, creating the hi-tech value chains as well as developing the company’s ecosystem. And I believe that APH can fulfil these targets.
