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TTC sets targets for M&A deals

Released at: 22:35, 05/11/2016

TTC sets targets for M&A deals

Photo: Duc Anh/Illustration

Leading sugar player to target M&A deals to increase market share, annual shareholders meeting hears.

by Hong Nhung

The Thanh Thanh Cong Group (TTC), a Vietnamese company in the local sugarcane industry, has recently announced merger and acquisition (M&A) plans for two of its subsidiaries, Thanh Thanh Cong Tay Ninh JSC (TTCS) and Bien Hoa Sugar JSC (BHS).

“We are implementing M&A deals in order to increase our competitiveness with foreign rivals,” Mr. Pham Hong Duong, Chairman of TTC’s Sugar Segment, told its recent annual shareholders meeting.

In early October, the Hoang Anh Gia Lai Group (HAGL) confirmed with local media that it has been in negotiations with TTC over the acquisition of its sugar refinery in Laos by TTC. TTC made no further comment on the deal when contacted by VET.

TTC acquiring the HAGL sugar refinery would create a large sugar production company worth around $450 million. HAGL has good raw material resources and the M&A would become an important link in completing TTC’s value chain and help cut the domestic sugarcane price so it can compete with sugar from Thailand, Mr. Duong told local media.

At the meeting, TTCS announced a target for consolidated revenue in fiscal year 2016-2017 of $180 million, with pre-tax profit at $14 million and a dividend payout of 6 to 10 per cent.

Net revenue from sales and services at TTCS reached $180 million, exceeding the plan by 22 per cent, according to the consolidated financial statement for fiscal year 2015-2016. Pre-tax profit was over $14 million, 41 per cent more than the plan. Earnings per share therefore reached $0.07.

TTCS partnered with TP Bank and VIB in May this year to issue a bond package valued at $45 million that aims to optimize its financial structure, increase capital efficiency and prepare financial resources to help it implement its projects in the 2016-2020 period.

In August, TTCS increased its charter capital by 30 per cent. It now has 253,188,268 shares, for charter capital of $114 million.

In order to ensure the company’s competitiveness and sustainable development in the future, three strategies were raised by the TTCS’s Board of Management at the meeting: increasing market share and creating high added value products, reducing costs through controlling material areas, and expanding by M&A deals.

The company’s RE and RS sugar products account for about 18 per cent of the sugar market, with RE having the largest share.

Over the next five years the company will focus on industrial customers while seeking more niche markets and increasing retail sales. It also plans to export sugar candy to Singapore through its newly-established subsidiary. To reduce costs, the company’s policy is to increase investment so that the sugarcane yield can compete with Thailand by 2020.

TTC is the leading company in the sugar industry as it holds the controlling stake in many large sugar companies, including TTCS, BHS, Gia Lai Hydropower Sugar (SEC), Ninh Hoa Sugar (NHS), and Phan Rang Sugar.

In the latest move, TTC has merged SEC with TTCS and NHS with BHS. TTC will still hold the advantages TTCS and BHS possess: advanced technology, experienced staff, strong brands, and a large retail network.

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