Minh Phu Seafood Corp., Vietnam’s largest shrimp producer, is embarking on plans to boost its exports to the United States, with a view to taking advantage of the trade war between the U.S. and China.
In a stakeholders’ extraordinary general meeting on 10 November, the company approved plans to build a breaded shrimp processing plant in Vietnam and two cold storage facilities in the United States, Le Van Quang, chairman and CEO of Minh Phu, told SeafoodSource on 13 November.
The breaded shrimp processing plant, to be built in the Mekong Delta province of Hau Giang, will have annual capacity of 40,000 metric tons (MT). The plant will process shrimp imported from India and supplied by other factories run by Minh Phu in the southern region.
The idea to set up the processing plant came as China’s exports of breaded shrimp to the U.S. have stalled due to the ongoing trade war between the two powers. The United States has imposed a 10 percent duty on breaded shrimp from China, from zero percent previously, and the tariff will rise to 25 percent by the year-end. Seeking to avoid the tariffs, a number of U.S. importers have approached Minh Phu and asked it to increase sales of breaded shrimp to the United States, the company said in a statement.
Minh Phu expects to start constructing the factory in Hau Giang in June 2019 and begin operations around 18 months after that, Quang said.
The company also approved another plan to build two cold storage facilities with capacity of 10,000 pallets each. One will be located in Los Angeles and the other in New York – Minh Phu’s two main ports of entry for its shrimp shipments to the United States. The addition of the two facilities will help ease the overload facing the existing warehouse system in the United States, thus cutting unnecessary costs, Quang said.
Minh Phu is in talks with potential contractors in the United States to finalize contracts to build the two facilities, construction at which is expected to finish in about 16 months, Quang told SeafoodSource.
Minh Phu’s expansion plans were initiated as the company sharply increased exports this year. It hit all-time high for exports in two consecutive months in August and September.
The company targets to raise its export volumes this year by 20 percent from last year’s 56,514 MT. It will also strive to achieve the goal of USD 800 million (EUR 712.3 million) of export value this year, up 15.6 percent from 2017, according to Quang.
At the shareholders’ meeting, Minh Phu also approved a plan to issue nearly 76 million shares to investors through a private placement to raise its charter capital to VND 2.16 trillion (USD 92.3 million, EUR 82.2 million) from VND 1.4 trillion (USD 59.8 million, EUR 53.2 million). The share issuance is expected to take place in 2018 or 2019. The proceeds will be used to strengthen the company’s financial position and add more capital for production and business activities.
The selected investors should have strong financial capability and show long-term commitments with the development of Minh Phu, Quang said, though he declined to identify potential investors, citing terms of confidentiality.
Minh Phu’s shares are being traded at around VND 47,000 (USD 2.00, EUR 1.80) per share on the Vietnam’s Unlisted Public Company Market.
At its meeting, the company’s management board agreed to eliminate some of its non-core operations, including its real estate, civil works, road freight, and motor vehicle rental. Quang, however, said this is merely a formality requiring an adjustment to its business registration certificate granted by local government in Vietnam, as Minh Phu currently does not invest in these operations.
In addition, Minh Phu is in the process of establishing a research and development unit on shrimp fries and feeds, according to Quang, which he said would support the company’s sustainable growth. Minh Phu will reserve and dedicate one percent of its sales to the unit every year, he said.
Photo courtesy of NDH
