Chairman Pham Anh Duong, An Phat Holdings: We aim to become the biggest bioplastics group in South East Asia

The Covid-19 outbreak has significantly changed the consumption habits of people all around the world as well as drastically influencing the global supply chain. In the first quarter of 2020, there was a Vietnamese enterprise specializing in manufacturing compostable products not only increasing the quantity but also the sales volume, receiving more orders from the US and Europe.

“At the moment, An Phat Holdings (APH) is confident with its capacity and competitive position to move to a new development stage with several investment projects focusing on key areas of compostable products & compounds, packaging, engineering plastics & building materials plastics, raw materials & chemicals for plastics industry, precision engineering & molding, industrial real estate, etc.” said Mr. Pham Anh Duong – Chairman of An Phat Holdings. An Phat Holdings will carry out Initial Public Offering (IPO) and have it shares listed on the stock exchange in 2020 to raise capital for the project of producing AnBio compostable material, taking the initiative in input materials along with reducing the product costs.

1. The only Vietnamese enterprise holding the patent for manufacturing compostable materials and the plan for IPO in 2020

Q: 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, our member which produces packaging and compostable products, accounts for almost 90% of APH’s revenue.

About compostable products, we have AnEco which are on shelves of many supermarkets, restaurants, hotels nationwide. The products have been also exported to many countries as they meet international standards.

About input materials, we cooperated 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 such products. The building of the PBAT plant is aimed at reducing the selling prices of our products.

In the packaging sector, APH has developed subsidiaries. Of which, we have AAA is the producer and others are provider of materials and product trader.

In 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.

Q: Can you share your plan to build a polybutylene adipate terephthalate plant?

-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: AAA), a key member 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 fully compostable products will account for 40%-50% of AAA’s total in 2023.

Q: 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 launch an IPO this year to attract more investors. The company is working with the HCMC Stock Exchange on the IPO plan.

Q: 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.

APH has raised its foreign ownership cap to 100% and has completed negotiations with some strategic financial investors on their ownership in the company.

2. Ideal opportunity to expand market

Q: With the plan to build the PBAT plant for manufacturing AnBio compostable materials, how will the initiative in materials help APH develop sustainably?

– We are determined to develop APH into a leading hi-tech and environmentally-friendly plastics firm in Southeast Asia. All product development and 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.

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 of these products. Meanwhile, when we take the initiative in input materials, the prices of compostable products will be cut nearly to the prices of common plastic products, so consumers will be willing to use environmentally-friendly products.

Q: APH is the first Vietnamese enterprise to successfully produce fully compostable products meeting international standards. What is the company’s strategy in the local market?

The green consumption trend is developing strongly worldwide

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 revenue from production by 2023.

Q: 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 accessories at present. When manufacturers tend to increase the localization rates of their products, we will have more orders to increase production of accessories for these partners.

In addition, the company will access new partners. As we have cooperated with firms which are well-known worldwide, such as Honda, Toyota, Samsung, LG and Panasonic, we will have more opportunities to work with other new partners.

Q: 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?

-Some partners have worked with us on leasing land lots. In the second quarter of this year, APH has transferred some land lots and will continue transfer 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.

Q: 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 park are located on ideal positions in the northern key economic region, which is attractive to investors.

Especially, 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 transport.

Our long-term objective is to develop these two industrial parks into hi-tech and eco-friendly complexes.

3. An Phat Holding will become the Southeast Asia’s leading high-tech and environmentally-friendly plastic group

Q: In 2020, APH still sets a higher profit target compared to 2019, what is the reason for the company’s confidence in its production and trading situation? In the last Covid-19 outbreak, did the company suffer any effects while the proportion of APH’s exports was still quite high, and regarding the supporting industries, especially the car and motorcycle sector, slowed down in the first quarter due to the epidemic?

In the first quarter of 2020, APH’s core subsidiary, AAA, did not experience any drop in quantity or even had an increase in the compostable product segment. The current epidemic will promote e-commerce, the shift of consumer trends from eating at restaurants to ordering fast food, which promotes the need to use gloves, knives, spoons, forks, etc.

In the supporting industry, Hanoi Plastic Joint Stock Co.,ltd (NHH) mainly serving the automobile and motorbike sector, has also been affected due to some customers’ production suspension. We expect the second half of the year will be a time of strong growth for AAA and NHH.

Furthermore, this year’s industrial real estate segment has maintained as stable as the previous year, expected to contribute 7% of revenue and 20% of profits to the total company’s.

Q: Your ambition of in the next 5 years?

-Since its foundation, our key member AAA has set an objective to become the largest plastic packaging enterprise in Southeast Asia and has now become such a company. From that, our next step is to become the largest bioplastics group in Southeast Asia withing the next 3-5 years, pioneering in the value chains, along with establishing and developing a sustainable business ecosystem.

Q: What steps does your company take to realize this ambition?

-In the short to medium term, we continue expanding our market share of compostable products in both foreign and domestic markets. We currently focus on the US market, strategically cooperating with US investors to expand the product range of bags, knives, spoons, forks, etc. Currently APH’s products are available in several major fastidious markets globally such as France, Romania, Italy, Australia, United States.

In the domestic market, we are presently focusing on retail channels, including Horeca and B2B channels.

APH’s partners all have strategies to expand the use of environmentally friendly products, our prospects in this area are very bright.

In the long run, by taking the initiative of environmentally-friendly materials, we can expand the market and reach the majority of customers. In particular, I expect the domestic market to grow stably, compostable products will quickly change the consumer habits when prices are significantly reduced.

In the supporting industry, we will diversify our customers outside the automotive – motorbike segment by increasing our business development with FDI electronics enterprises.

Translating from Cafe F newspaper

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