Vietnam Fertilizer Market 2015

‹#›

Vietnam Fertilizer Market 2015Date of report: 21 October 2015

Type of Services: Standard Report

Part of StoxPlus’s Market Research Report Series for Vietnam

@ 2015 StoxPlus Corporation.

All rights reserved. All information contained in this publication is copyrighted in the name of StoxPlus, and as such no part of this publication may be

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Date: 20 October 2015

Dear Clients,

Re: The publication of Vietnam Fertilizer Market Report, 2015

StoxPlus has been issuing the first updated Vietnam Fertilizer Market

Report in the last 2 years, providing the first and most comprehensive

report on this sector. Taking into account feedbacks from our clients, in

addition to the comprehensive analysis of the market itself, we updated

Vietnam fertilizer Market Report this year with the focus on analyzing

demand and supply together with distribution network and price of

fertilizer in Vietnam.

The research provides latest information on current situation of supply –

demand in Vietnam fertilizer sector by analyzing two main sources of

demand including (i) domestic, and (ii) exporting activities as well as

the key development trends. Full 10 year forecasts (2015 – 2025) are

included in this update.

As part of the research, we have conducted various field trips as well as

discussions and interviews with industry players at management levels

to grasp local insights of how fertilizer is distributed in Vietnam. For the

pricing survey, we analyze fertilizer price in the North, Central, and the

South.

We understand that this is a targeted but also an open research. We would

be happy to provide any further information to address any questions that

you may have, for any specific sector or target business in Vietnam. Our

ultimate objective is to bring real values to our clients via in-depth

research and practical local insights.

Should you have any questions, please contact I myself or our Research

Manager, Ms. Lan Nguyen at +84-4-35626962 (ext. 109) or her email:

[email protected]

Yours sincerely,

Nguyen Quang Thuan

CEO

StoxPlus Corporation

StoxPlus Joint Stock Company

Head office:

5th Floor, Anh Minh Building

36 Hoang Cau, Dong Da

Hanoi, Vietnam

telephone: (+84-4) 3 562 6962

stoxplus.com

Ho Chi Minh City Branch:

20th Floor, AB Tower

76A Le Lai Street, District 1

Ho Chi Minh City, Vietnam

telephone: (+84-8) 3823 3485

stoxplus.com

mailto:[email protected]

3

Table of Contents

Part Content Page

Executive Summary 5

1 Market Overall 7 - 37

1.1 Market Structure & Overview 7 - 9

1.2 Market Size & Growth 10

1.3 Segmentation Analysis 13

1.4 Demand Analysis 15

1.5 Supply Analysis 20

1.6 Value Chain Analysis 26

1.7 Pricing 36

2 Analysis of NPK Fertilizer Market 38 - 53

2.1 Demand - Supply Analysis 38

2.2 Competitive Landscaping and Analysis 43

2.3 Pricing 49

2.4 Profile of 2 FDI players 51

3 Analysis of Nitrogen Fertilizer Market 54 – 68


3.2 Competitive Landscaping and Analysis 60

3.3 Profile of top 4 Urea manufacturers 64

Part Content Page

4 Analysis of Phosphate Fertilizer Market 69 - 74


4.2 Profile of top 3 Phosphate manufacturers 71

5 Industrial Performance 75 - 79

6 Macroeconomic Situations and Regulatory

framework

80 - 90

6.1 Macroeconomics 80

6.2 Regulatory Framework 86

7 Appendixes 91 - 101

7.1 Appendix 1: Status of projects 91

7.2 Appendix 2: Factsheet of selected fertilizer

companies

93

4

Abbreviation

No. Word Stand for

1 APR Annual Percentage Rate

2 ATIGA Asean Trade in Goods Agreement

3 EBIT Earning Before Income Tax

4 GSO General Statistic Office

5 JVF Japan Vietnam Fertilizer Company

6 MARD Ministry of Agriculture and Rural Development

7 MOF Ministry of Finance

8 MOIT Ministry of Industry and Trade

9 MT Million tons

10 NYMEX New York Mercantile Exchange

11 PVFC PetroVietnam Fertilizer and Chemical JSC

12 PVN Petrovietnam

13 TSC Techno – Agricultural Supplying JSC

14 USDA U.S. Department of Agriculture

5

Executive Summary

1. From a country that has to import

fertilizer, Vietnam has been able to supply

domestic consumption of fertilizers

There is a gap between price of fertilizers in

the North and in the South.

Distribution system for fertilizer in Vietnam is

very fragmented and regional-based

Total demand for NPK fertilizer is

forecasted to increase by 4% annually.

However, demand for each NPK segment

varies

2. Since 2014, Vietnam NPK has witnessed a

supply surplus. However, quality of NPK

fertilizer in Vietnam varies. Premium NPK,

especially those produced by chemical

machinery technology, has not been produced

in Vietnam

This part is intentionally left blank

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Executive Summary (cont’d)

NPK fertilizer supply will increase in the next

5 years. However, quality of NPK fertilizers of

pipeline projects is still questionable

3. Nitrogen fertilizer witnesses a stable

demand in recent years

4.Phosphate fertilizer is still supply – demand

locally.

5. In 2014, most of listed fertilizer companies

had higher EBITDA than that of 2013

6. Major market for fertilizer has a bright

outlook

7. Vietnam Government has issued several

policies supported for fertilizer market


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Section 1: Market Overall

1.1 Market Structure & Overview

1.2 Market Size & Growth

1.3 Segmentation Analysis

1.4 Demand Analysis

1.5 Supply Analysis

1.6 Value Chain Analysis

1.7 Pricing

Contents

8


Market Structure & Overview

Vietnam Fertilizer Market is divided into 2 main segments: Organic Fertilizer and Inorganic Fertilizer.

Ammonium

Sulphate (SA)

Popular in Vietnam

before 1970s.

Currently, market

share of this sector is

insignificant, mostly

used for low

productivity crops.

Fertilizers

Organic

Fertilizers

Inorganic

Fertilizers

Phosphate (P)

Fertilizers

Potassium (K)

Fertilizers

Nitrogen (N)

Fertilizers

Diammonium

Phosphate (DAP)

Urea

Very popular in

Vietnam, demand for

inorganic fertilizers is

over 10mn tons per

year. Hence, we focus

on this sector only.

SA is completely imported due to the

incapability of production.

There are merely 2 manufacturers: DAP Dinh

Vu and DAP Lao Cai.

4 main manufacturers are: Phu My Fertilizer

(“DPM”), Ca Mau Fertilizer (“DCM”), Ha Bac

Fertilizer and Ninh Binh Fertilizer.

NPK Synthetic

Fertilizers

Superphosphate

Fused Magnesium

Phosphate (FMP)

Lam Thao Superphosphate and Chemicals

(“LAS”) and Southern Fertilizer only.

LAS, Ninh Binh Phosphate Fertilizer and Van

Dien Fused Magnesium Phosphate.

Potassium is imported entirely.

Top 3 players are all subsidiaries of Vinachem:

LAS, Binh Dien and Southern Fertilizer.

Source: StoxPlus

Figure 1: Structure for Vietnamese Fertilizer Market

9

A long story for the development of Vietnam Fertilizer Market


Market Structure & Overview

• Before 1960: the edge of organic fertilizer.

It is a tradition that farmers use organic fertilizer including green manure, legumes, filled

bars, strawberry dirt, muck, etc. to increase crop yield.

• 1960 – 1992: single nutrient fertilizer’s emergence.

There is a presence of inorganic fertilizer majorly under the single nutrient type. Urea is

manured majorly while phosphate and potassium are applied with a minority part.

• After 1992: The extensive use of fertilizer in Vietnam.

Agricultural production has grown significantly and constantly over years thanks to the

application of fertilizers. Since a country with a large amount of imported products, local

production has gradually met market demand. By establishing new factories and expanding

current scale production, there is a significant increase in fertilizer production from

approximately VND 5,370 thousand tons in 2009 to over 9 thousand tons in 2014.

• Vietnam still has to import some types of fertilizers, that domestic companies have yet been

able to produced (SA and K) or domestic production has yet met demand (DAP). Total

imported fertilizer is in a downward trend leading to a supply surplus for Urea, phosphate and

NPK. However, SA and Potassium still depend on imports entirely due to the incapacity of

production.

• The main suppliers for domestic consumption are subsidiaries of Vinachem and PVN, which

account for over 90% of the market share. From 2013 onwards, domestic market could be in

oversupply of Urea, P and NPK (total capacity of domestic producers will exceed demand),

while Vietnam still imports other fertilizers (SA, DAP and K).

10





1.4 Demand Analysis

1.5 Supply Analysis


1.7 Pricing

Contents

11

Vietnam fertilizers sector was about US$3.87bn in 2014


Market Size & Growth

Source: StoxPlus estimated from GSO, PVFC

Figure 2: Fertilizer Demand and Supply (Unit: 1000 MT)

This page is intentionally left blank

12

Figure 3: Vietnam Fertilizer Demand and Supply Forecasted

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

1000 M

T/year

Local Production Total Demand (Forecast 2% growth) Total Demand (Forecast 4% growth) Total Demand (Forecast 6% growth)

Source: StoxPlus estimated


Market Size & Growth


13





1.4 Demand Analysis

1.5 Supply Analysis


1.7 Pricing

Contents

14

Figure 4: Fertilizer Demand by types of products (Unit:1000 MT)

Source: StoxPlus estimated from PVFC


Segmentation


15





1.4 Demand Analysis

1.5 Supply Analysis


1.7 Pricing

Contents

16


Demand Analysis

NPK is the most popular fertilizer, contributed 37% of total demand for fertilizer

Figure 5: Fertilizer demand by category, 2014

Source: StoxPlus from MARD

The demand for fertilizer also depend on habit of farmers. Cultivation habits of

farmers are shifting.

• Before 1990, Vietnam is an agricultural country with obsolete technology. Hence,

the application of fertilizer for crops is still limited and not particular. Major

fertilizers manured are single nutrient such as Urea, Phosphate.


17


Demand Analysis

The South of Vietnam has the highest demand for fertilizer

Total area of

agricultural

production land

(Thousand ha)

Paddy land

(Thousand

ha)

Maize planted

land

(Thousand ha)

Forestry Land

(Thousand ha)

Figure 7: Agricultural land areas by category, 2014

Source: StoxPlus from GSOSource: StoxPlus from MARD

Figure 6: Fertilizer demand by regions


18


Demand Analysis

There are 3 main cropping seasons in Vietnam with different demand for fertilizer

Figure 8: Fertilizer demand by seasons


Figure 9: Fertilizer demand by seasons



19


Demand Analysis

Among tremendous types of crops, rice is the highest fertilizer usage one.

Figure 10: Fertilizer demand by crops


20





1.4 Demand Analysis

1.5 Supply Analysis


1.7 Pricing

Contents

21


Supply Analysis

Source: StoxPlus estimated from GSO, PVFC

Figure 11: Fertilizer Demand and Supply (Unit: 1000 MT)


22

Figure 13: Top 10 fertilizer import companies by value, 1H2015

Source: StoxPlus from MARD, MOIT, Agromonitor

Figure 12: Imported fertilizers by countries, 1H2015

Source: StoxPlus from General Customs

There are several reasons leading to the decrease in

importing fertilizers

No. CompaniesImport Amount

(USDmn)

1

2

3

4

5

6

7

8

9

10


Supply Analysis


23

From a country importing fertilizer, Vietnam has gradually becoming a fertilizer exporter, especially

to Cambodia market

Figure 15: Top 15 fertilizer export companies by value, 1H2015

No. CompaniesExport Amount

(US$mn)

1 Quang Binh Export Import Company

2 Ha Anh Export Import Company

3 Baconco

4 Southern Fertilizer

5 Can Tho fertilizer & Chemical JSC

6 Binh Dien Fertilizer

7 Tuong Dung Company

8 Ca Mau Fertilizer

9 Fivestar

10 Nguyen Duy Ltd.

11 Vedan Vietnam

12 Phu My Fertilizer

13 Tuong Nguyen Export Import Company

14 Hoang Anh Gia Lai Subsidiary

15 Ninh Binh FertilizerSource: StoxPlus from General Customs


Figure 14: Structure of exported fertilizers by countries, 1H2015


Supply Analysis


24


Supply Analysis

No. Name of the project Area

Designed

capacity (1,000

tons/year)

Investment amount

(US$mn)Investment period

2011 - 2015 period

1

2

3

4

5

6

7

8

9

10

2016-2020 period

1

2

3

2021 - 2030 period

1

As the large number of projects commencing in following years, Urea and NPK will likely experience a

supply surplus. Meanwhile, DAP and Potassium production capacity is invested more instead of entirely

import.

Source: StoxPlus from MOF


25


Supply Analysis

Most of phosphate manufacturers are located in the North

Mother SOE Company Area

Designed Capacity (1000 MT/year)

Fused Magnesium

PhosphateNPK Superphosphate Urea DAP

Vinachem

the North

the South

the North

the North

the South

the South

the North

the North

the North

the North

PVNthe South

the South

Others

the South

the South

the South

the South

Source: StoxPlus consolidated


26





1.4 Demand Analysis

1.5 Supply Analysis


1.7 Pricing

Contents

27


Value Chain Analysis

Raw Material

Manufacture

Distribution channels

Source: StoxPlus


28

Fertilizer is distributed through a complicated and overlapping distribution system consisting of 4

major groups of players. No players own a distribution network. Rather, they connect with different

agents to distribute fertilizer productsFert

iliz

er

Domestic production

Local manufacturers

Regional distributors

Trading companies

Agents

Import

Production Distribution

Agents level 1,

2,3

• Fertilizer is distributed via many layers of distributors from manufacturers to end users (farmers). The reason is because Vietnamese farmers

tend to buy fertilizer on credit, and pay back when they have harvested and sold their farming products.

• Manufacturers and distributors do not engage in selling products on credit, as it would require a lot of capital. Also, it increases level of

financial risk. Only local agents at level 2 or 3 can take that risk. Therefore, the distribution network for fertilizer is very fragmented.



Source: StoxPlus

29

A unique characteristic of Vietnam fertilizer distribution is that no player owns a distribution

network. Rather, they connect with a network of agents to distribute fertilizer products



Source: StoxPlus


30

Company Profile Distribution network

Distribution capacity

PVFCCo has the most developed distribution network nationwide.

• Registered name: Petrovietnam Fertilizer and Chemical JSC

• Head office: No 43 Mac Dinh Chi, Da Kao Ward, District 1, Ho Chi Minh

• Year of establishment: 2004. Charter Capital: VND3800bn (US$190mn)

• Type of company: Listed Company

• Principal group businesses: Production and merchandise of fertilizers

liquefied Amonia, industrial gas and other chemicals; Merchandise of

fertilizer and chemicals (apart from poisonous chemicals); Electricity

production and trade; Other activities under the business license;

• Main products: Fertilizer products, Chemical products

• # of employees: 1,090 by Dec 2012




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Company Profile Distribution capacity

Vinacam is a major import – export company for fertilizer products.

• Registered name: VINACAM JOINT STOCK COMPANY

• Head office: 28 Mac Dinh Chi, Da Kao St, County 1, Ho Chi Minh City

• Year of establishment: 2005

• Charter Capital: VND70bn (USD$3.33mn)

• Import Volume: 552.243MT of fertilizers (2013)

• Sales Volume : 571.800MT of fertilizers (2013)

• Type of company: 100% Private

Financial indicators

2009 2012 2013




32


Apromaco has an extensive network of 500 agents nationwide.

• Registered name: Agricultural Products and Materials JSC

• Head office: 14 Ngo Tat To, Van Mieu, Dong Da, Hanoi

• Year of establishment: 1990. Charter Capital: VND159.6bn

(US$7.60mn)

• Type of company: Unlisted company


2009 2010 2011 2012 2013 2014




33


TSC used to be a major fertilizer distributor in the South. They have a distribution network

in the South West region.

• Registered name: Techno - Agricultural Supplying JSC

• Head office: No 1D, Pham Ngu Lao, Ninh Kieu Dist, Can Tho

• Year of establishment: 1976. Charter Capital: VND70bn (US$3.33mn)

• Type of company: 100% Private

• Principal group businesses: Export and import of chemical fertilizers &

agricultural products; Production of seeds, plant protection

• Main products: Fertilizer products, Agriculture material products

• Subsidiaries: West Export Food Processing JSC; TSC Agrichem JSC; TSC

Seeds JSC

• Owner: FIT Investment Group (65.1%);

VND million FY2010 FY2011 FY2012 FY2013 FY2014





34

No. Company name Province Region Manufacturing capacity Distribution capacity

1

2

3

4

5

6

7

Major regional distributors and level-1 agents in the North




35

No. Company name Province Region Manufacturing capacity Distribution capacity

8

9

10

11

12

13

14

15

Major regional distributors and level-1 agents in the South




36





1.4 Demand Analysis

1.5 Supply Analysis


1.7 Pricing

Contents

37


Pricing

The price of fertilizer depends strongly on crude oil price, fertilizer price on international market

and the Government’s policies.

Figure 17: Crude Oil Price

Source: StoxPlus from NYMEX

45.72

US$ /

Barr

el

US$ /

MT

Rock Phosphate Potassium DAP Urea

Figure 16: Global price of major fertilizer, 2010 – 2015 ytd

Source: StoxPlus from World Bank


38

Section 2: Analysis of NPK Fertilizer Market

Contents

2.1 Demand - Supply Analysis

2.2 Competitive Landscaping and Analysis

2.3 Pricing

2.4 Profile of top 2 FDI players

39

According to StoxPlus’ analysis, Vietnam is still suffering from a high shortage of high-quality NPK

which merely accounted for 10% of the market share.

Figure 18: Vietnam NPK demand and supply



Demand – Supply Analysis


40

Figure 20: Vietnam NPK supply by regions


Figure 19: Vietnam NPK demand by regions





41

NPK demand depends on the growth of of crop consumption and export, especially rice

Figure 21: Vietnam NPK consumption by crops, 2014


Source: StoxPlus from BMI Report

Figure 22: Vietnam consumption and production of rice, 2014-2019f




42

NPK demand will increase constantly at over 4% in following years as the total agricultural crops are

expected to grow significantly.

Figure 23: Vietnam NPK forecasted demand and supply

Source: StoxPlus

We are here




43




2.3 Pricing


Contents

44

Vinachem and its subsidiaries account for nearly half of existing NPK fertilizer capacity

Figure 24: Market share by capacity of local manufacturers in 2014

(thousand MT/year)



Competitive Landscaping and Analysis


45

Vinachem and its subsidiaries account for nearly half of existing NPK fertilizer capacity

No. Project Name City/Province Region Investment

cost (US$mn)

NPK capacity

(tons/year)

Companies Timeframe Status

1

2

3

4

5

6

7




46



Figure 25: Market share of key players by NPK import volume, 6M2015

Source: StoxPlus from Agromonitor

Vietnam is lacking of high quality NPK as the technology applied nationwide is mostly basic

Country Export Value (US$)

Figure 26: Export value of NPK by countries, 6M2015



47

Different groups of players have different competitive advantages that impact their market position





48



Key Players Product differentiation Pricing Target market Implications

More details on differentiation strategy of key players



49




2.3 Pricing


Contents

50


Pricing

Price of NPK fertilizer in the South is more expensive than the North

Figure 27: NPK Phu My 16-16-8 price as of October 15 2015


Price ranged from

Price ranged from VND

Price ranged from VND

Price ranged from


51


Contents



2.3 Pricing


52

Ownership Structure Financial Indicators

Strengths and WeaknessesCompany Profile

• Registered name: Japan Vietnam Fertilizer Company

• Total investment capital: US$39,750,000

• Established in 1995, after 10 years, the company has operated the first

manufacturer in Vietnam, specialized in NPK fertilizer, capability of 350,000

ton per year in Long Thanh ville, Dong Nai Province.

• Aiming on providing the best qualified fertilizer to the market, JVF has

focused on advance technology and diversified product with purpose to meet

the demand of Vietnamese’s farmers. JVF won several well-known prize of

Vietnam.

• Technology: As a company applies chemical technology – one of the most

advanced NPK manufacturing technology, JVF is also the contract manufacture

of large firms such as: Phu My Urea – PVFCCo, Fivestar,… besides having its

own distribution network. There is no specific amount that they have invested

in R&D.

Japan Vietnam Fertilizer Company

2011 2012 2013


Profile of 2 FDI players


53

Financial Indicators

Company Profile Strengths and Weaknesses

Ownership Structure

BACONCO Fertilizers Joint Venture

• Registered name: Baconco fertilizers Joint venture

• Head office: Phu My 1 Industrial Park – Tan Thanh District, Ba Ria – Vung Tau

province

• Year of establishment: 1996. Total investment capital: US$46.9mn

• Type of company: Joint venture

• Principal group businesses: Baconco Co., Ltd. manufactures and distributes

fertilizers and crop care products. It also provides crop nutrition, crop

protection, and liquid foliar products. .

• Main products: the exclusive USP High Tech, ĐẠM CAO 20, SOP 100%,

SuperTan, and AVS families; pesticides, herbicides, etc.

• Capacity: 200,000 tones per year Employees: 500

• Technology: Baconco is currently applying simple mixing technology. Then

they will package products and distribute by their nationwide distribution

channels.

2012 2013 2014


Profile of 2 FDI players


54

Section 3: Analysis of Nitrogen Fertilizer Market

Contents



3.3 Profile of top 5 Urea manufacturers

55



Total demand for nitrogen fertilizers in 2015 is forecasted to reach around 4,210 thousand MT,

accounting for over 37% nationally.

Figure 28: Local demand of nitrogen fertilizers, 2009 – 2015F

Source: StoxPlus estimated from PVFCCo


56

Local capacity as of 31/12/2014 reached 2,355 thousand MT/year, which is surely a supply surplus for

Urea market leading to an increase in export volume.



Figure 29: Local demand and Urea supply by key manufacturers, 2003 - 2015

Source: StoxPlus from PVFCCo


57

Figure 30: Market share of key players by Urea import volume, 6M2015 Figure 31: Breakdown of Urea Import by countries

Source: StoxPlus from Agromonitor Source: StoxPlus from General Department of Vietnam Customs




58



Vietnam is still suffering from a high shortage of DAP (imported over 65%) and SA (imported entirely)

Figure 32: Local production of Nitrogen fertilizer by real capacity,

8M2015 (Unit: 1000 MT)

Source: StoxPlus from MOIT

Figure 33: Import volume by category, 8M2015 (Unit: 1000 MT)

Source: StoxPlus from Vietnam General Custom


59

Figure 34: Breakdown of export volume by countries, 6M2015


Company Export value (US$)

PetroVietnam Camau Fertilizer Joint Stock Company

Phu My Fertilizer Corporation

Ninh Binh Fertilizer Sole Proprietorship Co., Ltd

Tuong Dung Company

Loi Danh Trading and Services Co., Ltd

Hoang Anh Gia Lai Subsidiary

5 - Star International Group

Chinh Phuong Export Import and Trading Co., Ltd

Ha Bac Chemicals and Fertilizer Co., Ltd

Tuong Nguyen Export Import and Trading Co., Ltd

Figure 35: Top 10 export players by value, 6M2015





60


Contents




61

Phu My Fertilizer and Ca Mau Fertilizer accounts for over 60% of Urea market share.

Figure 36: Market share by capacity of local manufacturers in 2015

(thousand MT/year)





62

Section 3: Analysis of Urea Fertilizer Market


Figure 37: Price of Urea, November 2014 – October 2015

Vietnam Urea price is still affected strongly by China Urea due to the lack of controlling from

smuggling, leading to price dumping.

Source: StoxPlus from Binh Dien Fertilizer


63



Key Players Product differentiation Pricing Target market Implications

PVN Phu My Fertilizer

PVN Ca Mau Fertilizer

Vinachem Ha Bac Fertilizer

Vinachem Ninh Binh Fertilizer

More details on differentiation strategy of key players.

Source: StoxPlus


64


Contents




65


Company Profile Breakdown of Revenue 2014

Ownership Structure

Phu My Fertilizer

2008 2009 2010 2011 2012

• Registered name: Petrovietnam Fertilizer and Chemical JSC

• Head office: No 43 Mac Dinh Chi, Da Kao Ward, District 1, Ho Chi Minh

• Year of establishment: 2004. Charter Capital: VND3800bn (US$190mn)


• Principal group businesses: Production and merchandise of fertilizers

liquefied Amonia, industrial gas and other chemicals; Merchandise of

fertilizer and chemicals (apart from poisonous chemicals); Electricity

production and trade; Other activities under the business license;

• Main products: Fertilizer products, Chemical products



Profile of top 5 Urea Manufacturers


66





• Registered name: PetroVietnam Ca Mau Fertilizer Joint Stock

Company

• Total investment capital: US$ 252,095,238

• Established in 2011, the company specialized in urea fertilizer,

distributing in Southeast, Western, Cuu Long Delta and other Asia

markets as Cambodia, Thailand. The company operates a fertilizer

factory with the capability of 800,000 tons urea each year,

equivalent to 40% domestic demand.

• Technology: As a company applies chemical technology – one of

the most advanced manufacturing technology besides having its

own distribution network.

PetroVietnam Ca Mau Fertilizer Joint Stock Company

2012 2013 2014


67

Section 4: Analysis of Phosphate Fertilizer Market

Profile of top 3 Phosphate Manufacturers



• Registered name: Ha Bac Nitrogenous Fertilizer & Chemicals

Company Limited (HANICHEMCO)

• Total investment capital: VND2,000bn

• Established 1976, the company has capacity of producing 2 million

tons of Urea fertilizer, 45,000 tons high quality NH3; 180,000 tons

NPK fertilizer.

• HANICHEMCO won several well-known prizes of Vietnam.

Ha Bac Nitrogenous Fertilizer & Chemicals Company Limited (HANICHEMCO)

2011 2012 2013


68





• Registered name: The Southern Fertilizer JSC

• Total investment capital: 435,433,060,000 VND

• Established in 1976.

• Currently, the company produces more than 600,000 tons of

fertilizers with a turnover of 4.500 billion and more than 1,100

staff and workers. The company has 9 attached units and a joint

venture with LG Chem Corporation, Korea

• Business scope:

Manufacturing and trading of fertilizers, types (superphosphate,

NPK, foliar Yogen ...), cement, sulfuric acid and other chemical

products.

Purchase of equipment, machinery, spare parts and raw materials

for production of fertilizers and chemicals.

Fabrication and installation of equipment, chemical production line.

Production, processing, bottling, packaging, wholesaling plant

protection products.

Southern Fertilizer JSC

2012 2013 2014


69


Contents


4.2 Profile of top 3 Phosphate manufacturers

70

Local production of Superphosphate and Fused Magnesium Phosphate is capable of meeting domestic

demand.



CompanySuperphosphate

(1000 MT/year)

Fused Magnesium

Phosphate

(1000 MT/year)

Figure 38: Local production of Phosphate, 6M2015



71


Contents


4.2 Profile of top 3 Phosphate manufacturers

72





Van Dien Fused Magnesium Phosphate JSC

2012 2013 2014

Other33%

• Registered name: Van Dien Fused Magnesium Phosphate JSC.

• Total investment capital: 289.734.570.000 VNĐ

• Established in 1963. Current capacity 450,000 tons / year of which

300.00 tons of calcined phosphate and 150,000 tons of NPK .

• The company owns six patents and inventions and utility solutions

• Business Scope of the Company :

- Manufacturing and trading of calcined phosphate , fertilizers ,

building materials , packaging.

- Export of calcined phosphate and other fertilizers.

- Import of fertilizers and raw materials , machinery and

equipment for production and business.

- Business and commerce services.


73



• Registered name: Ninh Binh Phosphate Fertilizer Joint Stock

Company

• Total investment capital: 104,875,510,000 VNĐ

• Established in 1977

• Produce 300,000 tons of FMP per year, 200,000 tons NPK per year

• Business scope:

Manufacture of fertilizers and nitrogen compounds

Production of cement

Wholesale material, other equipment installed in the

building

Production of other specialized machines that have not

been categorized (Manufacturing; processing;

manufacturing; equipment manufacturing FMP)

Ninh Binh Phosphate Fertilizer Joint Stock Company

2012 2013 2014




74




Company Profile Income results

Ownership Structure

Lam Thao Fertilizers & Chemicals Jsc

2008 2009 2010 2011 2012

70%

12%

18%

• Registered name: Lam Thao Fertilizers & Chemicals JSC

• Head office: Lam Thao Town, Lam Thao District, Phu Tho Province

• Year of establishment: 1962. Charter Capital: VND648bn

(US$32mn)


• Principal group businesses: Produce and trade of fertilizers,

chemical, electricity, water, cement, fuel oil; Design construction

works, manufacture and installation of equipment, chemical

product lines

• Main products: Phosphate fertilizer, Fused phosphate fertilizer,

NPK fertilizer, Sulfuric acid.



75

Section 5: Industrial Performance

Contents

76

Source: StoxPlus

In 2014, most of listed fertilizer companies had higher EBITDA than that of 2013

Figure 39: % EBITDA of Listed Fertilizer Companies


Key financial ratios


77

Figure 40: D/E of Listed Fertilizer Companies

Source: StoxPlus

The average D/E ratio of listed fertilizer companies has improved, standing at 0.86 times.




78

Figure 41: Net Profit Margin of Listed Fertilizer Companies

Source: StoxPlus

In 2014, net profit margin grows unequally among other firms.




79



Figure 42: SG&A/Revenue of selected players

SGNA/Revenue ratio in 2014 performed unevenly among industry players.

Source: StoxPlus


80

Section 6: Macroeconomic Situations and Regulatory Framework

6.1 Macroeconomic Situations

6.2 Regulatory Framework

Contents

81

Market Overview: Bright Outlook For Agribusiness In VietnamFigure 43: Breakdown of Vietnamese Agriculture Industry, 2013

Source: GSO

72%

26%

2%

54.8%

10.3%

27.3%

6.3%

Figure 44: Breakdown of Vietnamese Farming

Source: GSO

Section 6: Vietnam Macro Economy and Agribusiness Overview

Macroeconomic Situations| Overview


82

Rice: Vietnam is the third largest rice exporter by volume yielding US$2.96bn value in 2014

Source: Ministry of Agriculture and Rural Development of Vietnam

Figure 45: Vietnam Rice Production

2008 2009 2010 2011 2012 2013 2014

1000 t

on

s

2010 2011 2012 2013 2014

China

Philippine

Malaysia

Ghana

Indonesia

Ivory Coast

Hong Kong

Singapore

Figure 46: Rice Export (1000 MT)



Macroeconomic Situations| Major market


83

Coffee

Source: StoxPlus from USDA

Figure 47: Vietnam Coffee Production, 2008-2014

There is no specific restriction on foreign ownership of local coffee

companies. However, there would be some minor issues for foreign

investor such as land rental right, which should be approved by

MONRE, Ministry of Defense, etc. since Highland region of Vietnam

used to have sensitive politic issue with minority ethnic people.

2008 2009 2010 2011 2012 2013 2014

1000 6

0kg b

ags




84

Sugar and Sugarcane: Vietnam has annual of 1.765mn tons sugar and annual of 20.1mn tons of

sugarcane in 2013Figure 48: Vietnam Sugar Production & Consumption, 2008-2013


2008 2009 2010 2011 2012 2013 2014

Figure 49: Vietnam Sugarcane Production, 2008-2014

2008 2009 2010 2011 2012 2013

Sugar Production Sugar consumption


1000 t

ons

1000 t

ons




85

Fertilizer industry would benefit tax reduction from a number of signed FTAs


Macroeconomic Situations


86


6.1 Macroeconomic Situations

6.2 Regulatory Framework

Contents

87

The Government has issued policies regulating the management of fertilizers and stabilize market

price to protect local farmers.

Fertilizers are listed in the list of conditional commodities in

Vietnam.

• Decree No. 202/2013/NĐ-CP replaced Decree No. 113/2003/ND-CP

dated 10/07/2003 of the Government on management of

manufacturing and trading of fertilizers and the Decree

No.191/2007 /ND-CP dated 31/12/2007 of the Government

amending.

• Since 01 February 2014, MOIT and MARD has specific management

functions in fertilizer industry. Whereas, MOIT is assigned to

manage the production, sales and quality of inorganic fertilizers

while MARD is in charge of organic fertilizers and other fertilizer

(mixture of organic and inorganic, other fertilizers).

The Government tightens the procedure of fertilizer quality

management.

• Fertilizer producers and distributors are required to obey stricter

conditions in quality testing, business license, import – export,…

Accordingly, fertilizer manufacturers, distributors and importers

are required to submit several papers which proves that labels of

fertilizers are conformable with the laws on goods labels and the

laws on goods quality; also the fertilizers are safe for the

environment. It is believed as a “life vest” for local producers and

farmers who are affected negatively by fake and unqualified

fertilizers.

Fertilizer Law: regulatory round up

• Under the Regulations on Fertilizer (Decree No. 202/2013/NĐ-CP dated

November 27th 2013 ), MOIT and MARD shall manage the fertilizer industry

that prioritize quality, and strictly impose violations.

• Also under this decree, fertilizer is listed as conditional commodities in

Vietnam which include the following:

− Oil & Gas;

− Explosive Substances;

− Wines;

− Tobacco;

− Electricity;

− Rice, etc.


Regulatory Framework

88

The legal framework encourage foreign companies to invest in Vietnamese market.

Ownership structure:

Licensing Procedure:

Licensing process for manufacturing fertilizers

Licensing process for distributing fertilizers




89

The new laws on VAT has negative impacts on local fertilizer prices.




90

Several changes in import tax will have significant impacts on the imported fertilizer market.

The Government has adjusted the import taxes for major fertilizers,

especially Urea.

• On November 15th 2013, the Ministry of Finance issued Circular No.

164/2013/TT-BTC about export tariffs, and import tax which stated that Urea

and DAP fertilizer import tax increased to 6% from 3% in 2013; Potassium and

SA import taxes remain unchanged at 0%; NPK at 6%. Thus, in addition to NPK

import goods are subject to import duties of 6% (if originating from Asean, the

tax rate shall be 3%), two major fertilizer Urea and DAP by other domestically

produced shall be charged taxes when imported into Vietnam as 6% and 3%

respectively since the beginning of 2015. This will affect the amount of import

of these commodities in the coming year due to domestic goods price

competitive advantage. Other items, such as potassium fertilizers, SA ...

which are unable to produce in the country should remain 0% in import taxes.

The new regulation on fertilizer tax promote local production significantly.

• As of 12/30/2014, the import tariffs of UREA in Vietnam was in line with WTO

commitments. With this tax rate, UREA imports fell significantly and

encouraged domestic production (according to data from the General

Department of Customs, within 4 months of 2014, after a 3% tax rate has

effect, UREA 69% imports decreased in volume and 72% in value over the same

period in 2013). Currently, the total production of urea production of 4

factories: Hebei, Ninh Binh (Vinachem) and Phu My and Ca Mau (PetroVietnam)

has met domestic demand and partly for export.

Type of

fertilizers

Tax rate from

01/01/2014 –

25/10/2014

Applicable tax

rate since

25/10/2014(%)

Figure 50: Fertilizer Tax applied in 2015



Source: StoxPlus

91

Section 7: Appendixes

7.1 Status of projects

7.2 Factsheet of listed fertilizer companies

Contents

92


Status of projects

No. Name of the project AreaDesigned capacity

(1,000 tons/year)

Investm

ent

amount

(US$mn)

Investment period Status

2011 - 2015 period

1 Bac Giang

2 Thanh Hoa

3 Lao Cai

4 Lao Cai

5 Thanh Hoá

6 Laos PDR

7 the North

8 the North

9 the North

10Ba Ria - Vung

Tau

2016-2020 period

1 the South

2 Laos PDR

3 the North

2021 - 2030 period

the North



93


7.1 Status of projects

7.2 Factsheet of listed fertilizer companies

Contents

94


Factsheet of listed fertilizer companies

South Basic Chemicals HT1 HT1 HT1 CSV

VND 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales & Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin %

Financial Expense

Interest Expense

Profit/(Loss) before tax

Net Profit/(Loss) after

tax

Net Profit Margin

%

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts payable

Borrowings

Non-Current Liabilities

Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

PetroVietnam Camau Fertilizer HT1 HT1 HT1 DCM

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales & Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin %

Financial Expense

Interest

Expense


Net Profit/(Loss) after tax

Net Profit

Margin %

Cash Flow From Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

95



DAP Dinh Vu Fertlizers HT1 HT1 DDV

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

Duc Giang Chemicals HT1 HT1 DGC

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



Net Profit

Margin %


CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

96



Phu My Fertilizer HT1 HT1 DPM

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

Materials Biochemistry Fertilizer HT1 HT1 HSI

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA

Margin %

Financial

Expense

Interest

Expense



Net Profit

Margin %


CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

97

Viet Tri Chemical HT1 HT1 HVT

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets



Lam Thao Fertilizers HT1 HT1 LAS

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

98



Petrolimex Petrochemical HT1 HT1 PLC

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA

Margin %

Financial

Expense

Interest

Expense

Profit/(Loss) before

tax


tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Debt/ Total Assets

SouthEast PVFC HT1 HT1 PSE

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

99



Quang Binh Import And Export HT1 HT1 QBS

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

The Southern Fertilizer HT1 HT1 SFG

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

100



Can Tho Techno-Agricultural HT1 HT1 TSC

VND Millions

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

Can Tho Fertilizer & Chemical HT1 HT1 CFCC

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

101



Van Dien Phosphate Fertilizer HT1 HT1 VAF

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

CICO HT1 HT1 CICO

VND Millions 2011 2012 2013 2014

Sales

Cost of Goods Sold

Gross Profit

GP Margin %

Overhead Expenses

Sales &

Marketing

S&M %

Administration

Admin %

EBIT

EBIT Margin %

EBITDA

EBITDA Margin

%

Financial

Expense

Interest

Expense



tax

Net Profit

Margin %

Cash Flow From

Operation

CFO/Sales

Current Assets

Accounts

receivable

Inventory

Non-Current Assets

Total Assets

Current Liabilities

Accounts

payable

Borrowings


Borrowings

Total Liabilities

Net Assets

102


Publishing License No. 3188-2015/CXBIPH/76-71/HD dated on October 29th, 2015

‹#›

If you need further assistance, contact us at:

Anh Nguyen

Research Associate+84 (0) 35626962 (ext. 108)

[email protected]

Head Office

5th Floor, Indovina Bank Building

36 Hoang Cau Street

Hanoi, Vietnam

+ 84 (4) 3562 6962

Ho Chi Minh Branch

20th Floor, AB Tower,

76 Le Lai Street, District 1

Ho Chi Minh City, Vietnam

+ 84 (8) 3823 3485

Lan Nguyen

Managing Director+84 (0) 35626962 (ext. 109)

[email protected]



Vietnam Fertilizer Market 2015

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