Around 2015 – 2016, many large enterprises urgently invested thousands of billion dongs into agriculture. What they had expected was High-tech agriculture would gradually dominate the market, large scale manufacturing would help the business reach high turnover, at the same time, green trend will be the leverage to beat old school enterprises with old process.
However, reality is not that easy. While clean agriculture was still on the right track to the expectation of enterprises, it was not to the investors’. Slow return on investment caused the rejection of investors, hence resulted in cheap stocks for years.
The circumstance has twisted in the early 2019. After 4 to 5 years of investment, high-tech agriculture starts to harvest its “fruits” and its stocks has been strongly increasing.
Entering the market by M&A in 2015 – 2016, GTNfoods used to catch the attention of investors thanks to its thousands of hectares of tea, thousands of milk cows. But that interest soon faded because in order to grow fast, GTNFoods will have to invest “big” to restructure old business model into a modern and advanced system.
The restructure process was expensive and time consuming. The investors who couldn’t wait had gradually left GTNFoods, the company stocks dropped down to 1/3 just within a few years.
However, GTNFoods still persists clean agriculture. Green hills of tea were no longer planted by traditional methods with each farm having different farming techniques in which some were clean while others were dirty, some sellers gathered and competed to trade while others processed rudimentarily and messily. All are consistent in accordance with international standards related to clean agriculture. Vinatea’s tea manufacturing factory was also built modernly and continuously provides high-quality tea products. Vinatea’s tea is eligible to join the highest demanding foreign markets.
Another subsidiary of GTNfoods in Moc Chau is Moc Chau Milk, which has taken an upturn to grow rapidly. With cooperation with foreign experts, Moc Chau Milk has developed milk production process under European standards, in which raw material, farming and milking techniques all are carried out in a self-contained process.
Another subsidiary of GTNfoods in Moc Chau is Moc Chau Milk, which has taken an upturn to grow rapidly. With cooperation with foreign experts, Moc Chau Milk has developed milk production process under European standards, in which raw material, farming and milking techniques all are carried out in a self-contained process.
Most of the well-informed sources in stock market might still remember the free falling of Hoang Anh Gia Lai (HAG-HNG) a few years ago. Taking a big loan to invest into agriculture, HAGL was in the financial red alarm when their products haven’t found an output. The debt circle has put their stock price into critical condition for years.
After financial restructuring, since the beginning of 2017, HAGL has “transform” its core businesses, shifting its focus on agriculture. While perennial tree such as seinga, palm tree have yet to show the results, Boss Duc has decided to plant fruit tree to create quick cash inflow.
In line with his initial plan, after 2 years, fruits become the core business of HAGL, bringing the stable cash inflows and high return. It is estimated that the total revenue from fruits reached about VND 4,461 billion and gross profit from fruit was at VND 2,514 billion with rate of return of 56%
HAGL stated that high profit margin from fruit is derived from large scale, direct sales to markets in China. Besides, selling price are much higher than domestic farmers’ thanks to provision of products of large quantity, stable and consistent quality, and clearly known origin (from one single producer instead of collecting from individual farmers).
According to HAGL, self-contained farming techniques enable HAGL Agrico to take advantage of products and by-products from businesses to the fullest to optimize operating productivity, minimize operating waste and expenses, and enhance its competiveness of the Company’s products.
Thanks to the right direction and success, investors do not boycott HAG and HNG stocks anymore. Instead, HAG and HNG of Boss Duc has increased by 20% over the last 3 months, which draws attention of a large number of investors in the market.
One of typical cases that is worth noting is Vinamilk (VNM). As one of the popular milk company in the market, everyone knows the company. However, one of the Clean Agriculture that Vinamilk is pursuing has yet to be understood clearly.
According to sharing of Mrs. Mai Kieu Lien, Vinamilk realizes that organic trend will quickly spread all over Vietnam and decide to heavily invest in this sector.
Although Vinamilk has continuously grown over the last years, during the first operation phase of investment phases, depreciation expenses are usually high. Many short-term investors could not wait and don’t dare to invest in VNM given its falling price.
After sharing of Mrs Mai Kieu Lien, many people understand the reason why Vinamilk’s profit has not satisfied them over the last years and made them get bank to invest in it. They see how consumers desire organic products, how organic products are enjoyed, and above all, they see bright Vinamilk’s future will be when organic milk farm starts to earn profits.
VNM stock of Vinamilk has increased steadily by ~30% within few months since the story of Vinamilk in the future was revealed. Vinamilk shareholders have harvested its “fruits” from clean agriculture that the company has invested for long.
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