Vietnam's biggest pangasius producer moves into Russia
Hung Vuong, Vietnam’s top pangasius producer, has announced that it is investing USD 15 million (EUR 13.4 million) to acquire a 51 percent stake in the Russian Fish Joint Stock Company, a major processor and exporter of Alaska pollock.
Speaking at the company’s recent annual general meeting, Hung Vuong Chairman and CEO Duong Ngoc Minh said the Russian company, which registered USD 15 million last year in after-tax profits, was a leading company in the Russian market, importing and distributing numerous seafood products from 18 markets around the world.
The name of the Russian company hasn’t been revealed and there is a rumor that, in fact, Hung Vuong has invested in a conglomerate of Russian companies in order to gain better access to the Russian market. However, Minh said the Russian company was a world leader as a source of Alaska Pollock and that cooperation between Hung Vuong and the Russian firm would usher in good development for the Vietnamese company.
He added that due to current economic difficulties in Russia, consumers are opting for cheaper fish, opening an opportunity for Vietnamese exporters to sell more product in Russia.
Established in 2003, Hung Vuong Corporation processes and exports fishery products – primarily pangasius and shrimp – all over the world. However, like other Vietnamese pangasius producers, it is losing sales in the two major overseas markets for the fish – the E.U. and U.S. So Russia is seen as a great opportunity, particularly as Russian consumers prefer to buy cheaper whitefish varieties.
Hung Vuong, which in 2010 bought Agifish, at the time the number two pangasius producer in Vietnam after Nam Viet, is well placed to move into Russia, as Agifish had a large Russian business and needed the capacity to fulfill it. With the well-publicized economic problems in Russia due to E.U. sanctions and the low price of oil, Hung Vuong lost this business for a while but it is now coming back.
Hung Vuong also produces animal feed and operates cold storage plants in Vietnam and Russia, and there are rumors that the company is planning to go into pig farming with an eye on the Russian – and also the domestic – markets.
Minh said he believed Russia is ready to take a lot of product from Hung Vuong, particularly given the E.U. sanctions. Also, there are close ties between Vietnam and Russia, with Russian money pouring into Vietnam for tourism projects.
Along with the potential for selling more pangasius to Russia, there is also the potential for Hung Vuong’s underutilized pangasius plants to fillet and block-freeze Russian-caught Alaska pollock, particularly as labor costs in China are rising, making it more expensive to do it there.
At the corporation’s annual general meeting at the end of January, Minh also announced net revenue of more than VND 12.3 trillion (USD 551.5 million, 492.5 EUR million) and a profit-before-tax of VND 151 billion (USD 6.7 million, EUR 6 million).
Minh said that although profits had declined in 2015, this was connected to the profit downtrend on the global market. However, he said demand for domestic sales of fisheries products remained high.
Minh said the group was developing well, and forecast that the export market would be better this year. He is targeting revenue of VND 24 trillion (USD 1.076 billion, EUR 0.96 billion) and a profit-after-tax of VSD 500 billion (USD 22.4 million, EUR 20 million).
The group also planned exports of between USD 500 million (EUR 446.7 million) and USD 600 million (EUR 536 million) in 2016, of which fish exports would be worth between USD 200 million (EUR 179 million) and USD 250 million (EUR 223 million). Shrimp exports were forecast between USD 300 million (EUR 269.2 million) and USD 350 million (EUR 313 million).
It also expected to produce 1.5 million metric tons of animal feed in 2016 and 2.5 million metric tons in 2018.
In line with its new investment plan, Hung Vuong will gradually change its short-term capital structure to medium and long-term. Hung Vuong needs cash to upgrade its factories and for its pig farming plans this year, so it will pay the 2015 dividend of 20 percent in shares, Minh said.
In 2014 and 2015, Hung Vuong successfully issued VND 1.3 trillion (USD 58.2 million, EUR 52 million) in inconvertible three-year bonds to local credit institutions, including major Vietnamese investment banks.