VIETNAM CEMENT INDUSTRY REPORT Q1/2018
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Content
Summary 4
1. Business environment 6
1.1 Macroeconomic situation 6
1.2 Legal framework 12
2. Industry overview 21
2.1 World cement industry 21
2.1.1 Production 21
2.1.2 Consumption 24
2.2 Vietnam cement industry 25
2.2.1 History of Vietnam cement industry 25
2.2.2 Definition and Classification 27
2.2.3 Basic production process 28
2.2.4 Scale and market share 30
2.2.5 Supply-Demand 32
2.2.6 Cement and clinker export 33
2.2.7 Price movement 39
2.3 SWOT analysis 42
2.4 Cement industry planning 45
2.5 Outlook and forecast 48
2.5.1 Driving forces of industry development 49
2.5.2 Driving forces of output industry development 50
3. Enterprise analysis 51
3.1 Profitability 63
3.2 Performance efficiency 66
3.3 Financial strength 69
3.4 Return on investment 72
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3
ADB Asian Development Bank
BOT Build – Operate - Transfer
EVN Vietnam Electricity Corporation
FDI Foreign Direct Investment
FIA Foreign Investment Agency
ICR International Cement Review
Abbreviations
PPP Public – Private Partner
GDVC General Department of Vietnam Customs
GSO General Statistics Office of Vietnam
TKVVietnam National Coal and Mineral Industries Holding
Corporation Limited
VICEM Vietnam Cement Industry Corporation
VIRAC VIRAC Joint Stock Company
VNCA Vietnam National Cement Association
4
Vietnam cement market continues to have
excess supply
The perspective of cement demand can vary
significantly based on the development of
infrastructure projects and real estate cycles.
Cement quality is determined by two main
factors: limestone materials and technology,
equipment.
Logistic is still the weak point of the cement
companies in Vietnam.
Summary
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Summary
Three groups of cement suppliers in Vietnam:
Sales strategy:
Cement prices in the country are stable over
the years, the lowest in the North, and the
highest in the South
Production expenses:
Because of the competition within the industry
with large cement companies joining the
market, small cement firms are forced into
bankruptcy or merger because they are not
competitive enough.
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1. Business environment
1.1 Macroeconomic situation
1.2 Legal framework
Content
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Sources: VIRAC, GSO
Sources: VIRAC, GSO
Gross domestic product in 2017 is estimated to increase by 6.81% compared to
2016,
GDP per capita has increased strongly over the past few years.GDP by current price and GDP per capita, 2013-2017
GDP growth rate by quarter, 2015-2017
1. Business environment
1.1 Macroeconomic situation
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1. Business environment
1.1. Macroeconomic situation
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Source: VIRAC, SBV
Source: VIRAC, GSO
%
Industrial production index of the manufacturing, 2012 - 2017
VND/USD exchange rate, 2013-2017
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In 2017, the VND / USD exchange rate was quite stable around
VND 22,400.
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.
Source: VIRAC, GSO
Source: VIRAC, GSO
VND trillion
VND trillion
1. Business environment
1.1 Macroeconomic situation
State revenues, 2017
Government expenditures, 2017
State revenues and expenditures
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Sources: VIRAC, GSO
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The investment capital for society development by current
prices for economic sectors, 2010 – 2016e
The rate of development of social investment capital increasing
at current prices, 2013-2017
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1. Business environment
1.1 Macroeconomic situation
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Sources: VIRAC, FIA
Sources: VIRAC, FIA
FDI attraction by sector, 2017
FDI capital, 2015-2017Billion USD
Foreign direct investment
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1. Business environment
1.1 Macroeconomic situation
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1. Business environment
1.1 Macroeconomic situation
1.2 Legal framework
Content
1. Business environment
1.2 Legal framework - Group of general regulations
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Decision No.1488/QD-TTg established stricter conditions for new entrants by establishing different technical requirements:
Regulations on WHRPG (according to Decision No.1488/QĐ-TTg):
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1. Business environment
1.2 Legal framework - Group of general regulations
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Advantages Disadvantages
WHRPG system:
WHRPG Funds:
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Decree No. 177/2013 / ND-CP
1. Business environment
1.2 Legal framework - Group of price regulations
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1. Business environment
1.2 Legal framework - Group of price regulations
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Tax policy:
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1. Business environment
1.2 Legal framework - Group of price regulations
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1. Business environment
1.2 Legal framework - Group of environmental and resources regulations
No Parameter
Concentration C (mg/m³)
A B1 B2
Type of resourceTaxation
(%)
Applicable tax
rate (%)
Taxable
Items
Unit Tax rate raised by
National Assembly
(VND/unit)
Tax rate raised
by the Standing
Committee
Environmental Protection Tax (EPT)
Natural Resources Tax (NRT)
Environmental Protection Tax applied since 1/2012
Natural Resources Tax applied since 2/1/2014
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However, the tax rate on the resources has been reacted strongly by the business
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1. Business environment
1.2 Legal framework - Group of environmental and resources regulations
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1. Business environment
1.2 Legal framework - Group of Export Tax Regulations
The Ministry of Finance issued Decree No.122/2016/ND/CP dated 1 September 2016
Materials:
Clinker and cement:
No Item Export tax rate (%) Import tax rate (%)
Decree No.122/2016/ND/CP
Import and Export Tariffs applied since 2016
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2. Industry overview
2.1 World cement industry
2.2 Vietnam cement industry
2.3 SWOT analysis
2.4 Industry planning
2.5 Outlook and forecast
Content
2. Industry overview
2.1 World cement industry – 2.1.1 Production
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Source: VIRAC, Statista
Cement production in Asia is leading the world,
Cement production by region 2015e
Global Cement Production, 2011 – 2076e
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Million tons
China is currently the largest cement producer in the world,
No CountryProduction volume
(million tons)
23
Cement production output of some countries, 2017
Sources: VIRAC, Statista
Sources: VIRAC, Statista
Top largest cement producing countries, 2017e
2. Industry overview
2.1 World cement industry – 2.1.1 Production
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2. Industry overview
2.1 World cement industry – 2.1.2 Consumption
Source: VIRAC, Global Cement
24
Source: VIRAC, International Cement Review
Global Cement Consumption, 2010 – 2018e
Consumption structure of cement worldwide, 2016
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Million tons
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2. Industry overview
2.1 World cement industry
2.2 Vietnam cement industry
2.3 SWOT analysis
2.4 Industry planning
2.5 Outlook and forecast
Content
2. Industry overview
2.2 Vietnam cement industry – 2.2.1 History of Vietnam cement industry
Cement industry is one of the earliest established industries in
Vietnam (along with coal, textile, railway ...)
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2. Industry overview
2.2 Vietnam cement industry – 2.2.2 Definition and Classification
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Definition:
Clinker
Cement
Classification
Vietnam commonly used standards on cement today:
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2. Industry overview
2.2 Vietnam cement industry – 2.2.3 Basic production process
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2. Industry overview
2.2 Vietnam cement industry – 2.2.3 Basic production process
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2. Industry overview
2.2 Vietnam cement industry – 2.2.4 Scale and market share
Source: VIRAC, GSO
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Manufacturing enterprises allocation by region, 2016e
Chain allocation by area, 2016
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2. Industry overview
2.2 Vietnam cement industry – 2.2.4 Scale and market share
There are three main groups of cement suppliers in Vietnam:
Source: VIRAC, VNCA
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Consumption market share of key enterprises, 2017e
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2. Industry overview
2.2 Vietnam cement industry – 2.2.5 Supply-Demand
32
Source: VIRAC, VNCA
million tons
* Supply = total output of cement production; Demand = domestic cement consumption + export output of cement, clinker
Cement supply - demand, 2011 - 2017e
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2. Industry overview
2.2 Vietnam cement industry – 2.2.6 Cement and clinker export
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World’s top 6 largest cement exporting countries 2016e
million tons
Source: VIRAC, VNCA, Uncomtrade
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million tons
Source: VIRAC, VNCA
Cement clinker exports, 2010 - 2017e
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2. Industry overview
2.2 Vietnam cement industry – 2.2.6 Cement and clinker export
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The situation of cement export in the upcoming time is forecasted to be more difficult as China's excess cement production and export prices are low,
thus creating fierce competition for Vietnamese export cement.
Thousand tons
Source: VIRAC, GDVC
Cement clinker exports, 1/2015 - 12/2017e
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2. Industry overview
2.2 Vietnam cement industry – 2.2.6 Cement and clinker export
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Source: VIRAC, GDVC
In 2017, the main export markets for cement and clinker are Bangladesh and the Philippines.
million tons
Export markets for cement and clinker, 2015 - 2017e
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2. Industry overview
2.2 Vietnam cement industry – 2.2.6 Cement and clinker export
The cement exporters of Vietnam are divided into 2 types:
Cement manufacturers:
Trading company :
Capacity of cement manufacturers for export in 2016
Source: VIRAC, VNCA
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million
tons/year
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2. Industry overview
2.2 Vietnam cement industry – 2.2.6 Cement and clinker export
In 2017, for the export of cement directly, Vicem Ha Long, Nghi Son and
Thang Long are the three largest exporting enterprises,
Sourcces: VIRAC, VNCA
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Sources: VIRAC, VNCA
The enterprises export cement directly
, 2017
Exporters of clinker directly, 2017
2. Industry overview
2.2 Vietnam cement industry – 2.2.6 Cement and clinker export
2. Industry overview
2.2 Vietnam cement industry – 2.2.7 Price movement
Cement price in Vietnam is much lower than that of other countries in the region and the world average price.
Source: VIRAC, ICR
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USD/ton Cement price, 2016
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Generally in 2017, cement prices are stable compared to 2016 because the price of raw materials and inputs, production costs are stable so the cement
manufacturing factories hold cement price stably.
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Source: VIRAC, Department of Price
Management
VND thousand/ton
Cement price, 2016
Sale price of cement at some cement companies, 2017
VND thousand/ton
Source: VIRAC, Department of Price
Management
Retail price of cement in the areas, 2017
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2. Industry overview
2.2 Vietnam cement industry – 2.2.7 Price movement
Export priceSource: VIRAC, Department of
Price Management
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USD/tonExport price of cement and clinker, 6/2015 - 12/2017
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2. Industry overview
2.2 Vietnam cement industry – 2.2.7 Price movement
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2. Industry overview
2.1 World cement industry
2.2 Vietnam cement industry
2.3 SWOT analysis
2.4 Industry planning
2.5 Outlook and forecast
Content
Advantage:
Limitation:
2. Industry overview
2.3 SWOT analysis
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Opportunities:
Challenges:
2. Industry overview
2.3 SWOT analysis
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2. Industry overview
2.1 World cement industry
2.2 Vietnam cement industry
2.3 SWOT analysis
2.4 Industry planning
2.5 Outlook and forecast
Content
2. Industry overview
2.4 Industry planning – 2.4.1 Cement industry planning
Decision No. 1488/QD-TTg of the Prime Minister approving the planning on development of Vietnam cement industry.
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Year Cement demand
(million tons)
2. Industry overview
2.4 Industry planning – 2.4.1 Cement industry planning
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2. Industry overview
2.1 World cement industry
2.2 Vietnam cement industry
2.3 SWOT analysis
2.4 Industry planning
2.5 Outlook and forecast
Content
2. Industry overview
2.5 Outlook and forecast – 2.5.1 Driving forces of industry development
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2. Industry overview
2.5 Outlook and forecast – 2.5.2 Driving forces of output industry development
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Population growth, 2011 – 2017e
Forecast for value of construction and infrastructure,
2010 – 2022f
Source: VIRAC
Source: VIRAC, GSO
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Content
3. Enterprise analysis
3.1 Profitability
3.2 Performance efficiency
3.3 Financial strength
3.4 Return on investment
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3. Enterprise analysis
3.1 Typical enterprises in 2015
Name of enterprise Classification Address
Charter
capital
(VND
million)
Revenue in 2016
(VND million)
1 Ha Tien 1 Cement Joint Stock Company
2 The Vissai Cement Corporation
3 Nghi Son Cement Company
4 VICEM Hoang Thach Cement Company Limited
5 Bim Son Cement Joint Stock Company
6 VICEM But Son Cement Joint Stock Company
7 Thang Long Cement Joint Stock Company
8VICEM Hoang Mai Cement Joint Stock
Company
9Quang Ninh Cement and Construction Joint
Stock Company
10 Sai Son Cement Joint Stock Company
Top 10 cement enterprises with the highest revenue in 2016
Source: VIRAC
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3. Enterprise analysis
Ha Tien 1 Cement Joint Stock Company
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Ha Tien 1 Cement Joint Stock Company
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3. Enterprise analysis
The Vissai Cement Corporation
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The Vissai Cement Corporation
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3. Enterprise analysis
Nghi Son Cement Company
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Nghi Son Cement Company
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3. Enterprise analysis
VICEM Hoang Thach Cement Company Limited
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VICEM Hoang Thach Cement Company Limited
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3. Enterprise analysis
Bim Son Cement Joint Stock Company
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Bim Son Cement Joint Stock Company
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3. Enterprise analysis
VICEM But Son Cement Joint Stock Company
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VICEM But Son Cement Joint Stock Company
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3. Enterprise analysis
Thang Long Cement Joint Stock Company
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Thang Long Cement Joint Stock Company
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3. Enterprise analysis
VICEM Hoang Mai Cement Joint Stock Company
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VICEM Hoang Mai Cement Joint Stock Company
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3. Enterprise analysis
Quang Ninh Cement and Construction Joint Stock Company
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Quang Ninh Cement and Construction Joint Stock Company
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3. Enterprise analysis
Ha Tien 1 Cement Joint Stock Company
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Sai Son Cement Joint Stock Company
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3. Enterprise analysis
3.1 Profitability
3.2 Performance efficiency
3.3 Financial strength
3.4 Return on investment
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3. Enterprise analysis
3.1. Profitability
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Source: VIRAC
VND million Net revenue growth, 2015 - 2016
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3. Enterprise analysis
3.1. Profitability
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Source: VIRAC
VND millionGross profit growth, 2015 - 2016
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3. Enterprise analysis
3.1 Profitability
3.2 Performance efficiency
3.3 Financial strength
3.4 Return on investment
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3. Enterprise analysis
3.2 Performance efficiency
Source: VIRAC
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Source: VIRAC
Unit: times Unit: times
Fixed asset turnover, 2015 - 2016Total asset turnover, 2015 - 2016
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3. Enterprise analysis
3.2 Performance efficiency
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Source: VIRAC
Unit: timesInventory turnover, 2015 - 2016
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3. Enterprise analysis
3.1 Profitability
3.2 Performance efficiency
3.3 Financial strength
3.4 Return on investment
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3. Enterprise analysis
3.3. Financial strength
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Source: VIRAC
Payment ratio, 2015 - 2016
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3. Enterprise analysis
3.3. Financial strength
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Source: VIRAC
Solvency, 2015 - 2016
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3. Enterprise analysis
3.1 Profitability
3.2 Performance efficiency
3.3 Financial strength
3.4 Return on investment
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3. Enterprise analysis
3.4 Return on investment
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Source: VIRAC
%Profit ratio, 2015 - 2016
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