Ho Chi Minh City, Vietnam-based pangasius company Hung Vuong Joint Stock Corp. on Thursday, 9 January, signed a strategic cooperation agreement with local automotive manufacturer Thaco Group, local media reported.
Under the deal, Thaco, via its agricultural arm Thadi, will buy a 35 percent stake in Hung Vuong, which is struggling with losses and debts. The value of the purchase was not provided.
Thadi will participate in the board of management of Hung Vuong, support its restructure process, and address the pangasius producer’s financial difficulties. Thadi will also hold 65 percent stake in a USD 86 million (EUR 77.3 million) joint venture set up by the two sides to raise breeding pigs.
Hung Vuong Chairman Duong Ngoc Minh said at the signing ceremony that, with the help of Thadi's investment, his company plans to export 100,000 metric tons (MT) of pangasius this year – mainly to Mexico, Canada, China, and Japan – amounting to USD 250 million (EUR 224.6 million) of revenue in 2020.
“Pangasius farmers in [the] Mekong Delta are waiting for the rebound of Hung Vuong. For the past years, they have benefited from Hung Vuong’s policies,” Minh said, according to Vietnambiz.
Hung Vuong will also expand into shrimp production with the opening of 500 hectares of shrimp farming area in the Mekong Delta of Ben Tre this year. The company expects to export its shrimp to Japan and South Korea, it said.
As of the end of June 2019, Minh owned a 39.13 percent stake in Hung Vuong. Minh told VnExpress at the signing ceremony that his stake is down to 38 percent after the deal. Right before the agreement was signed, 56.38 million shares of Hung Vuong or 24.8 percent of total trading shares, were traded on 9 January.
Previously dubbed the “king of pangasius," Hung Vuong was the largest pangasius company in Vietnam in 2008 and 2009. Its business performance improved through 2014, before declining in the following years. Mounting financial pressure on the firm forced it to sell many of its assets, including stakes in other seafood firms and non-core businesses.
On 30 October, 2019, Hung Vuong said its financial year ending on 30 September saw revenue fall more than 50 percent to VND 3.95 trillion (USD 170 million, EUR 152.3 million). Its accumulated loss, as of 30 September, was VND 892 billion (USD 38.3 million, EUR 34.4 million).
Hung Vuong’s total debts as of 30 September were VND 3.06 trillion (USD 131 million, EUR 118 million), nearly doubling its equity.
Hung Vuong explained in a filing to the Ho Chi Minh stock exchange in late October that the anti-dumping duty that the U.S. imposed on its pangasius products negatively affected its sales value. Declining material prices also resulted in lower export prices in 2019.
In April last year, the U.S. Department of Commerce (DOC) issued final conclusion of the POR14 for the period from 1 August, 2016, to 31 July, 2017. The duty for Hung Vuong was USD 3.87 (EUR 3.48) per kilogram, much higher than the zeroed-out rate the department had announced in its preliminary review released in September 2018.
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