Vietnam's richest tycoons take turns doing agriculture

The richest tycoons in the stock market are constantly pouring money into agriculture in search of growth, turning the stock exchange into a big farm.

Investment in agriculture in late 2014 and early 2015 was considered favorable, as pressure from trade agreements promoted policies to support investment in agriculture.

The day HAGL entered the agricultural sector to seek growth

Agriculture in the era of billionaires always has two main trends: basic investment from the beginning and shortcuts through M&A. However, the most common point is still the problem of finding growth for these giants, when the core field is gradually saturated.

The story of 5 years of Mr. Duc

During the real estate crisis more than 5 years ago, Hoang Anh Gia Lai (HAGL) announced its withdrawal from the market and investment in agriculture, in order to seek more sustainable growth.

Mr. Duc's enterprise is considered the first big company on the stock exchange to make serious statements about agriculture.

Almost all information about HAGL's investment in agriculture has positive values, and the highlight that receives attention is the herd of cows.

However, the investment of about 18,000 billion VND and 5 years of experience in agriculture of HAGL has shown that professional agriculture on a large scale is not simple. During the time of actually living with agriculture, HAGL has also turned around in many ways to stabilize the situation.

Mr. Duc's first target for agriculture was rubber, because at that time the price of natural rubber was at its peak at 5,000 USD/ton. And after 5 years, when the rubber was harvested, the price of this agricultural product considered white gold was only about 1,500 USD/ton, a sharper decline than the price of crude oil.

The investment cost for HAGL's rubber, as shared by Mr. Doan Nguyen Duc, Chairman of the Board of Directors of HAGL, is 1,300 USD/ton.

In the coming years, HAGL's rubber exploitation area will increase sharply while raw material prices are still unknown whether they will change in a positive or negative direction.

HAGL continues to invest in sugarcane, palm oil and cattle farming. And with a herd of about 90,000 cattle, this is considered the main source of income now, not rubber, as the original target.

HAGL has had to constantly change, when specializing in the agricultural sector with a new company, Hoang Anh Gia Lai International Agriculture Joint Stock Company (HNG).

The establishment of a specialized company to operate in this field shows that Mr. Duc is taking agriculture as the spearhead of his business activities.

The richest billionaire grows vegetables, the second richest person makes animal feed

Following HAGL, billionaire Pham Nhat Vuong’s group also entered agriculture by building a closed chain for growing and consuming clean vegetables. This group invested about 2,000 billion VND with the ambition of repositioning the clean vegetable market in Vietnam and aiming for export.

High-tech agriculture is the model that many billionaires aim for when investing capital. (Photo: M.Anh)

In the recent shareholders' meeting, the Chairman of Vingroup Corporation shared: "Regarding profits, we set a target that: After only about 5-10 years, the proportion of real estate profits in the total structure will be only under 50%, the remaining 50% will come from other business segments. Thus, agriculture will be one of the segments to maintain growth."

Bau Long – the owner of Hoa Phat Group also jumped into the agricultural sector, preparing to launch the first batch of animal feed to the market. The group’s leadership set a goal of reaching a revenue of 3,000 billion VND/year in the next 3 years.

Accordingly, Hoa Phat has spent 300 billion VND to establish an animal feed production company in Hung Yen with a capacity of 300,000 tons/year.

After HAGL took the lead, a series of large enterprises on the stock market changed direction because it "sounded reasonable".

However, not all businesses have a reasonable calculation step. Currently, many businesses are in a position of groping to find their way into the market and investing in a big gamble.

Shortcuts

Coming later, but not choosing to exploit the land from the beginning like Hoa Phat, HAGL, Vingroup… because it takes a lot of time, many big companies have chosen a “shortcut”, by M&A with businesses in the field they want to target. With this method, some companies only need one step to jump from unknown to the top in the new field.

Massan and Pan Pacific are the units that have launched the most "raids" recently, to clearly demonstrate their goal of "expansion" in the agricultural sector.

For the past 3 years, Masan has continuously acquired businesses in the agricultural sector to complete the business chain according to the 3F model (Feed - Farm - Food). After this deal, Masan quickly acquired 15% of the animal feed market share.

If Masan is considered an innovative enterprise, Pan Pacific - Xuyen Thai Binh Duong is a pioneer in investing in the agricultural sector, with over 57% of shares in Ben Tre Seafood Import-Export Company, over 22% of shares in An Giang Seafood Import-Export Company (Agifish), 24% of capital in Long An Export Processing Joint Stock Company.

Meanwhile, with the desire to unify its seafood “empire”, Hung Vuong has acquired a series of companies in the same industry, such as Viet Thang, An Giang, Sao Ta Food, Ben Tre Forestry and Aquaculture. This strategy has helped the company increase its revenue from VND4,700 billion (in 2010) to over VND15,000 billion in 2014.

In 2015, after acquiring seafood companies but not yet bringing results, Hung Vuong switched to pig farming, announcing a project with a total investment of 2,000 billion VND. This includes the construction of 2 animal and poultry feed factories (in Long An and Binh Dinh); a farm system with a scale of 2,380 great-grandfather pigs (in Long An, An Giang, Ben Tre, Binh Dinh); a factory producing PRemix, veterinary medicine and accompanying logistics. This tycoon is said to be dreaming big in the agricultural sector.

Previously, when food companies in the Mekong Delta were equitizing, the owner of Nguyen Kim electronics also expressed his ambition to enter agriculture. From an unknown enterprise in agriculture, Nguyen Kim quickly gained a position when its leaders successively joined the boards of directors of Docimexco, Angimex, Vinh Long Food and Foodstuff, and Saigon Foodstuff.

Looking back at the agricultural experience of many famous figures on the stock market, Dr. Vo Tri Thanh - Deputy Director of the Central Institute for Economic Management shared: “This comes from market signals. But they are really 'betting' on agriculture with a huge investment. This also shows that the perception of agriculture has changed, and above all, it is an industry that creates good growth value”./.

According to VOV