These acquired companies have finally started to generate huge profits, and the Thai billionaire investors are reaping profitable growth from the patient fruit of their labor.
Investors profit in BMP
The Siam Cement Group (SCG), a corporate business company from Thailand, took the first step eleven years ago to enter the plastics industry in Vietnam. At that time, the Nawaplastic Industries Company Limited (Saraburi) surprised all to become a major shareholder of Binh Minh Plastic Joint Stock Company (BMP) and the Tien Phong Plastic Joint Stock Company (NTP). However, six years later, SCG decided to divest all NTP shares to BMP. At that time, many people thought that SCG had made the wrong move when BMP did not increase prices after reverting to Thai investors.
However, the move proved to be effective when NTP continuously plunged in 2022, while BMP continuously saw a rising wave. At that moment, BMP price was 60 percent higher than when SCG had bought it out. According to statistics, this investment of Nawaplastic Industries in BMP is estimated at about VND 750 bln. This does not include the money received from dividends. Ever since it became a major shareholder in early 2012, SCG has received dividends from BMP every year. In recent years, BMP often pays a very high dividend rate. For instance, last year BMP paid dividends at the rate of up to 84 percent. The total amount of dividends that SCG receives from BMP is about VND 1,400 bln.
It is a fact that after reverting to Thai investors, BMP has improved significantly. Evidence can be obtained from the molting of BMP compared to NTP. Previously, NTP revenue was always higher until it was surpassed by BMP in 2020. Not only revenue grew strongly, BMP gross profit margin also surpassed NTP at 28 percent vs 24 percent. BMP 2022 after-tax profit also set a record of VND 694 bln, more than three times higher than in 2021, while NTP net profit only moved up slightly from the previous year to VND 480 bln. Mr. Sakchai Patiparnpreechavud has also been recently elected on the Board of Directors of BMP.
Huge dividends for Sabeco
The most popular of the Thai acquisitions on the Vietnam stock market was the Saigon Beer-Alcohol-Beverage Corporation (Sabeco) in 2017. At that time, Vietnam Beverage belonged to Thaibev of Thai billionaire Charoen Sirivadhanabhakdi who spent nearly USD 5 bln to buy the whole lot of 343.66 million SAB shares equivalent to VND 320,000 per share and officially taking control of the largest beer company in Vietnam.
Compared to the SCG deal Thaibev suffered twice as much, because after the acquisition, SAB fell into a tragic situation when it was simultaneously affected by Decree 100 and the Covid-19 pandemic. From the highest share price on the stock exchange, SAB fell below VND 150,000 per share. At this price, Thai billionaire lost more than half of the fortune at SAB. However, SAB is currently a golden egg for Thaibev in Vietnam with a huge dividend income. In 2022, SAB is expected to pay an additional special dividend of 15 percent and bringing the total dividend to 50 percent, from which Vietnam Beverage will receive more than VND 1,700 bln. Since completing the acquisition of SAB, the Thai billionaire has pocketed a total of more than VND 8,200 bln in dividends.
After reverting to Thai investor SAB has improved in terms of business performance after many ups and downs. According to analysts, SAB beer sales will continue to grow in 2023, based on a product structure focusing on low-end and high-end lines. SAB beer revenue in 2023 is forecast to reach VND 33,256 bln, up by 8.7 percent, due to return of tourism which will boost spending on beverages, and SAB has an aggressive marketing campaign to regain the market share.
Vinamilk acquisition
The Thai billionaire also poured capital into the largest dairy enterprise in Vietnam, namely, the Vietnam Dairy Products Joint Stock Company (Vinamilk). Specifically, TCC Holdings, owned by billionaire Charoen Sirivadhanabhakdi, acquired Fraser & Neave from Singapore in 2013 for USD 11.2 bln. At that time, the Fraser & Neave subsidiary, F&N Dairy Investment, was a major shareholder of Vinamilk.
It is well known that F & N Dairy Investment poured money into Vinamilk (VNM) a long time ago but only got noticed since 2017, after the divestment of the State Capital Investment Corporation (SCIC). After many times changing ownership, Fraser & Neave now holds a total of more than 20 percent of capital in VNM, just behind state shareholdings of 36 percent.
It is estimated that the number of shares of VNM in the hands of Thai investors is currently at around USD 1.2 bln. Although the Thai billionaire does not dominate in the business, he still earns a large dividend from VNM, because the leading dairy company continues to regularly pays high dividends of about 40 percent to 60 percent annually. Particularly for dividends for 2022, Fraser & Neave earned more than VND 1,600 bln. Since holding shares in VNM in 2013, the Thai giants have pocketed more than VND 12,000 bln in dividends.
However, according to analysts, the goal of the Thai billionaire at VNM is not a source for dividends, but a further goal is the acquisition of the leading dairy business in Vietnam. After the SCIC divestment, Fraser & Neave and Platinum Victory PTE Limited, which is a member of Jardine Cycle & Carriage in Singapore, created a competitive race at VNM. Both organizations continuously subscribed to buy VNM shares with a large volume but then hardly traded and continued to register to buy again. Despite repeated denials, analysts say that the Thai billionaire is still looking for an opportunity to gain full control of Vinamilk.
