VPG BREAKTHROUGH IN MAIN BUSINESS AND POTENTIAL REAL ESTATE DEVELOPMENT
Viet Phat Import-Export Trading Investment Joint Stock Company (HOSE: VPG) has been known as one of the Vietnam Leading suppliers of Coke and Iron Ore for Steel Factories. Besides the Main business, VPG has been “Expanding” into the real estate industry, initially achieving some success.
Potential from “Expanding” into Real Estate sector
In recent years, Hai Phong Real Estate industry has begun to show signs of “heating up” and attracting many Investors because this locality is being tested for autonomy mechanism so the Hai Phong infrastructure has increased.
Since expanding business into Real Estate in 2017, VPG has successfully implemented a number of projects in Hai Phong, most notably the Viet Phat South city project in Vinh Niem Ward, Le Chan District, Hai Phong City. The project has total investment of VND 435 billion that has been successfully sold and handed over all 174 low-rise apartments.
In the future, VPG continue to invest in developing more Real Estate projects in Hai Phong, and at the same time expand the business to other Provinces and Cities. In the next coming time, VPG has 3 under development Projects with a total investment of VND 1,879 billion.
In Hai Phong, VPG is proposing to adjust and supplement the additional planning of Inland waterway ports to the People’s Committee to implement the investment project to build an Inland waterway port and logistics terminal at the riverbank land under the planning of Do Nong Industrial cluster in Le Thien commune, An Duong district. The Project locate an area of 46.8 hectares with an estimated total investment of VND 660 billion.
Along with the investment for building a port, VPG plans to invest VND 419 billion to implement the Viet Phat Inland Water Port Project in Kim Thanh district, Hai Duong province, with total investment of about 9.75 hectares. The Project was built with the aim of becoming a gathering point, transshipment of goods, and a trading point of building materials.
For the Residential Real Estate segment, VPG is preparing to deploy 2.48 hectares in Bac Tu Liem district, Hanoi to implement the Viet Phat Housing Project. Total investment in this project is up to VND 800 billion. Implementation time is estimated up to 2 years. Currently, the Company is submitting an investment proposal to the Ha Noi City People’s Committee, it is expected that by the end of the first quarter of 2022, the Investment policy will be approved.
In addition, Viet Phat Real Estate Joint Stock Company – a related Company with VPG is expanding many Real Estate projects in strategic locations in Hai Phong, including an Industrial park in Tien Lang District, Hai Phong with an area of 410 hectares.
Recently, a subsidiary of Viet Phat Real Estate Company has won a successful auction of Real Estate located in 2A New urban area, So Dau ward. The land area is more than 8,740 m2, located adjacent to the political and administrative center of Hong Bang district, which is planned to build a 5-star hotel.
Coke and Iron Ore business continues to play the leading role
Although “expanding” into Real Estate, the main business of Iron ore and Coke still takes an important role in VPG’s business results.
In the first 9 months of 2021, VPG’s Net Revenue reached more than VND 3,076 billion, 2.1 times higher than the same period last year. In which, Revenue from coking Coal and Iron ore business accounted for nearly 94% of total Revenue, equivalent to more than VND 2,879 billion, 2.4 times higher than in the first 9 months of 2020.
After deducting expenses, the Company reported a Profit after tax of approximately VND 360 billion, 13 times higher than the same period last year.
Business results in the first 9 months of 2021, VPG achieved a sudden growth thanks to the sharp increase in Iron ore and Coke prices. As for Iron ore, although the current price has dropped sharply from the peak of July, there has been a strong increase in the first half of the year. Coke, on the contrary, this mineral continuously increased sharply in the last period of the year after China announced to limit coal imports from Australia.
In 2021, the Company sold about 550,000 tons of Iron Ore and 200,000 tons of Coal Coke, Revenue is estimated at VND 4,000 billion. To prepare for the business plan in 2022, the Company signed with a partner 24,000 tons of Coke and 400,000 tons of Iron ore. It is expected to bring large revenue for the first 6 months of 2022.
In the mineral business market, VPG is an important input supplier of Iron ore and metallurgical Coke for large factories such as Hoa Phat Hai Duong Steel JSC, Hoa Phat Dung Quat Steel JSC, and Den Thai Nguyen Metallurgical JSC, PC1 ; At the same time, it is also a supplier of thermal coal for thermal power plants, large steel factories such as Thai Nguyen Iron and Steel Joint Stock Company, Hoa Phat Hai Duong Steel Joint Stock Company, …
Viet Phat’s position is further confirmed when the Company was ranked 4th in the groulp of companies in mining, processing, metal ore trading and mining industries, according to the TOP 500 argest Enterprises in Vietnam in 2020.
Prospects to become a leading supplier of Coal and Iron Ore
One of the factors that helped Viet Phat be selected to become a supplier for steel mills is that the product is always guaranteed in terms of quality and stability. Raw Iron ore products have been preliminarily refined at the Company’s own factory through production lines with modern technology. VPG’s products include non-magnetic Iron ore (Limonite) with Fe composition from 53% to 56%, magnetic Iron ore (Manhetite) with Fe content from 63% to 66%, titanium ore, sulphur bran…
In the upcoming time, VPG will continue to orient itself to become the leading raw material supplier for steel factories with the goal of supplying about 1 million tons of Iron ore, from 200,000 tons to 300,000 tons of Coke. In addition, VPG is also expected to supply about 50,000 tons – 80,000 tons of finished steel for large projects and works.
In addition to steel factories, VPG is also a partner in supplying thermal coal for thermal power plants. In the next 10 to 20 years, the coal-fired power industry will continue to be developed and account for a large proportion in the structure of electricity production. Therefore, total coal demand for thermal power is expected to remain high, although the current forecast is lower than in the past.
It is expected that by 2030, the thermal power industry will need about 150 million tons of coal. Therefore, coal imports in the coming time will account for an increasingly large proportion in the national import-export balance. Grasping the trend, VPG is still maintaining the relationship with foreign partners who have long-standing brands around the world in coking coal such as Sumitomo Co, Ltd, BHP Billiton, Wel-Hunt, Vale… to from Japan, Australia, Russia, Indonesia… and domestic partners such as Formosa Ha Tinh Steel JSC.
Currently, Viet Phat is promoting thermal coal consumption in thermal power plants of Electricity of Vietnam (EVN) and Vietnam Oil and Gas Group (PVN) such as Vinh Tan Thermal Power, Hai Phong Thermal Power Plant, and Thermal Power Plant. Duyen Hai power… Annual output ranges from 500,000 tons to 1 million tons.