VIETNAM CEMENT INDUSTRY REPORT Q1/2018

Transcription

1 VIETNAM CEMENT INDUSTRY REPORT Q1/2018 1

2 Content Summary Supply-Demand Business environment Cement and clinker export Macroeconomic situation Price movement Legal framework SWOT analysis Industry overview Cement industry planning World cement industry Outlook and forecast Production Driving forces of industry development Consumption Driving forces of output industry development Vietnam cement industry Enterprise analysis History of Vietnam cement industry Profitability Definition and Classification Performance efficiency Basic production process Financial strength Scale and market share Return on investment 72 2

3 Abbreviations ADB Asian Development Bank PPP Public Private Partner BOT Build Operate - Transfer GDVC General Department of Vietnam Customs EVN Vietnam Electricity Corporation GSO General Statistics Office of Vietnam FDI Foreign Direct Investment TKV Vietnam National Coal and Mineral Industries Holding Corporation Limited FIA Foreign Investment Agency VICEM Vietnam Cement Industry Corporation ICR International Cement Review VIRAC VIRAC Joint Stock Company VNCA Vietnam National Cement Association 3

4 Summary Vietnam cement market continues to have excess supply 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. The perspective of cement demand can vary significantly based on the development of infrastructure projects and real estate cycles. 4

5 Summary Cement prices in the country are stable over the years, the lowest in the North, and the highest in the South Three groups of cement suppliers in Vietnam: Production expenses: Sales strategy: 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. 5

6 Content 1. Business environment 1.1 Macroeconomic situation 1.2 Legal framework 6

7 1. Business environment 1.1 Macroeconomic situation Gross domestic product in 2017 is estimated to increase by 6.81% compared to 2016, GDP growth rate by quarter, Sources: VIRAC, GSO GDP by current price and GDP per capita, GDP per capita has increased strongly over the past few years. Sources: VIRAC, GSO 7

8 1. Business environment 1.1. Macroeconomic situation % Industrial production index of the manufacturing, Source: VIRAC, GSO VND/USD exchange rate, In 2017, the VND / USD exchange rate was quite stable around VND 22,400. Source: VIRAC, SBV 8

9 1. Business environment 1.1 Macroeconomic situation State revenues and expenditures VND trillion State revenues, VND trillion Government expenditures, 2017 Source: VIRAC, GSO Source: VIRAC, GSO 9

10 1. Business environment 1.1 Macroeconomic situation The rate of development of social investment capital increasing at current prices, The investment capital for society development by current prices for economic sectors, e Sources: VIRAC, GSO 11

11 1. Business environment 1.1 Macroeconomic situation Billion USD FDI capital, Foreign direct investment FDI attraction by sector, 2017 Sources: VIRAC, FIA Sources: VIRAC, FIA 11

12 Content 1. Business environment 1.1 Macroeconomic situation 1.2 Legal framework 12

13 1. Business environment 1.2 Legal framework - Group of general regulations 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): 13

14 1. Business environment 1.2 Legal framework - Group of general regulations WHRPG system: Advantages Disadvantages WHRPG Funds: 14

15 1. Business environment 1.2 Legal framework - Group of price regulations Decree No. 177/2013 / ND-CP 15

16 1. Business environment 1.2 Legal framework - Group of price regulations Tax policy: 16

17 1. Business environment 1.2 Legal framework - Group of price regulations 17

18 1. Business environment 1.2 Legal framework - Group of environmental and resources regulations Environmental Protection Tax applied since 1/2012 No Parameter Concentration C (mg/m³) A B1 B2 Taxable Items Unit Tax rate raised by National Assembly (VND/unit) Tax rate raised by the Standing Committee Natural Resources Tax applied since 2/1/2014 Environmental Protection Tax (EPT) Type of resource Taxation (%) Applicable rate (%) tax Natural Resources Tax (NRT) 18

19 1. Business environment 1.2 Legal framework - Group of environmental and resources regulations However, the tax rate on the resources has been reacted strongly by the business 19

20 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: Import and Export Tariffs applied since 2016 No Item Export tax rate (%) Import tax rate (%) Decree No.122/2016/ND/CP 20

21 Content 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 21

22 2. Industry overview 2.1 World cement industry Production Million tons Global Cement Production, e Cement production by region 2015e Source: VIRAC, Statista Cement production in Asia is leading the world, 22

23 2. Industry overview 2.1 World cement industry Production Cement production output of some countries, 2017 Top largest cement producing countries, 2017e No Country Production volume (million tons) Sources: VIRAC, Statista Sources: VIRAC, Statista China is currently the largest cement producer in the world, 23

24 2. Industry overview 2.1 World cement industry Consumption Million tons Global Cement Consumption, e Consumption structure of cement worldwide, 2016 Source: VIRAC, Global Cement Source: VIRAC, International Cement Review 24

25 Content 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 25

26 2. Industry overview 2.2 Vietnam cement industry History of Vietnam cement industry Cement industry is one of the earliest established industries in Vietnam (along with coal, textile, railway...) 26

27 2. Industry overview 2.2 Vietnam cement industry Definition and Classification Definition: Clinker Cement Classification Vietnam commonly used standards on cement today: 27

28 2. Industry overview 2.2 Vietnam cement industry Basic production process 28

29 2. Industry overview 2.2 Vietnam cement industry Basic production process 29

30 2. Industry overview 2.2 Vietnam cement industry Scale and market share Manufacturing enterprises allocation by region, 2016e Source: VIRAC, GSO Chain allocation by area,

31 2. Industry overview 2.2 Vietnam cement industry Scale and market share Consumption market share of key enterprises, 2017e There are three main groups of cement suppliers in Vietnam: Source: VIRAC, VNCA 31

32 2. Industry overview 2.2 Vietnam cement industry Supply-Demand million tons Cement supply - demand, e * Supply = total output of cement production; Demand = domestic cement consumption + export output of cement, clinker Source: VIRAC, VNCA 32

33 2. Industry overview 2.2 Vietnam cement industry Cement and clinker export World s top 6 largest cement exporting countries 2016e million tons Source: VIRAC, VNCA, Uncomtrade 33

34 2. Industry overview 2.2 Vietnam cement industry Cement and clinker export million tons Cement clinker exports, e Source: VIRAC, VNCA 34

35 2. Industry overview 2.2 Vietnam cement industry Cement and clinker export Thousand tons Cement clinker exports, 1/ /2017e Source: VIRAC, GDVC 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. 35

36 2. Industry overview 2.2 Vietnam cement industry Cement and clinker export In 2017, the main export markets for cement and clinker are Bangladesh and the Philippines. Export markets for cement and clinker, e million tons Source: VIRAC, GDVC 36

37 2. Industry overview 2.2 Vietnam cement industry Cement and clinker export The cement exporters of Vietnam are divided into 2 types: Cement manufacturers: million tons/year Capacity of cement manufacturers for export in 2016 Trading company : Source: VIRAC, VNCA 37

38 2. Industry overview 2.2 Vietnam cement industry Cement and clinker export The enterprises export cement directly, 2017 In 2017, for the export of cement directly, Vicem Ha Long, Nghi Son and Thang Long are the three largest exporting enterprises, Sources: VIRAC, VNCA Exporters of clinker directly, 2017 Sourcces: VIRAC, VNCA 38

39 2. Industry overview 2.2 Vietnam cement industry Price movement Cement price in Vietnam is much lower than that of other countries in the region and the world average price. USD/ton Cement price, 2016 Source: VIRAC, ICR 39

40 2. Industry overview 2.2 Vietnam cement industry Price movement 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. Cement price, 2016 VND thousand/ton Sale price of cement at some cement companies, 2017 VND thousand/ton Retail price of cement in the areas, 2017 Source: VIRAC, Department of Price Management Source: VIRAC, Department of Price Management 40

41 2. Industry overview 2.2 Vietnam cement industry Price movement USD/ton Export price of cement and clinker, 6/ /2017 Export price Source: VIRAC, Department of Price Management 41

42 Content 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 42

43 2. Industry overview 2.3 SWOT analysis Advantage: Limitation: 43

44 2. Industry overview 2.3 SWOT analysis Opportunities: Challenges: 44

45 Content 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 45

46 2. Industry overview 2.4 Industry planning Cement industry planning Decision No. 1488/QD-TTg of the Prime Minister approving the planning on development of Vietnam cement industry. 46

47 2. Industry overview 2.4 Industry planning Cement industry planning Year Cement demand (million tons) 47

48 Content 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 48

49 2. Industry overview 2.5 Outlook and forecast Driving forces of industry development 49

50 2. Industry overview 2.5 Outlook and forecast Driving forces of output industry development Forecast for value of construction and infrastructure, f Source: VIRAC Population growth, e Source: VIRAC, GSO 50

51 Content 3. Enterprise analysis 3.1 Profitability 3.2 Performance efficiency 3.3 Financial strength 3.4 Return on investment 51

52 3. Enterprise analysis 3.1 Typical enterprises in 2015 Top 10 cement enterprises with the highest revenue in 2016 Name of enterprise Classification Address 1 Ha Tien 1 Cement Joint Stock Company Charter capital (VND million) Revenue in 2016 (VND million) 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 8 9 VICEM Hoang Mai Cement Joint Stock Company Quang Ninh Cement and Construction Joint Stock Company 10 Sai Son Cement Joint Stock Company Source: VIRAC 52

53 3. Enterprise analysis Ha Tien 1 Cement Joint Stock Company Ha Tien 1 Cement Joint Stock Company 53

54 3. Enterprise analysis The Vissai Cement Corporation The Vissai Cement Corporation 54

55 3. Enterprise analysis Nghi Son Cement Company Nghi Son Cement Company 55

56 3. Enterprise analysis VICEM Hoang Thach Cement Company Limited VICEM Hoang Thach Cement Company Limited 56

57 3. Enterprise analysis Bim Son Cement Joint Stock Company Bim Son Cement Joint Stock Company 57

58 3. Enterprise analysis VICEM But Son Cement Joint Stock Company VICEM But Son Cement Joint Stock Company 58

59 3. Enterprise analysis Thang Long Cement Joint Stock Company Thang Long Cement Joint Stock Company 59

60 3. Enterprise analysis VICEM Hoang Mai Cement Joint Stock Company VICEM Hoang Mai Cement Joint Stock Company 60

61 3. Enterprise analysis Quang Ninh Cement and Construction Joint Stock Company Quang Ninh Cement and Construction Joint Stock Company 61

62 3. Enterprise analysis Ha Tien 1 Cement Joint Stock Company Sai Son Cement Joint Stock Company 62

63 Content 3. Enterprise analysis 3.1 Profitability 3.2 Performance efficiency 3.3 Financial strength 3.4 Return on investment 63

64 3. Enterprise analysis 3.1. Profitability VND million Net revenue growth, Source: VIRAC 64

65 3. Enterprise analysis 3.1. Profitability VND million Gross profit growth, Source: VIRAC 65

66 Content 3. Enterprise analysis 3.1 Profitability 3.2 Performance efficiency 3.3 Financial strength 3.4 Return on investment 66

67 3. Enterprise analysis 3.2 Performance efficiency Total asset turnover, Unit: times Fixed asset turnover, Unit: times Source: VIRAC Source: VIRAC 67

68 3. Enterprise analysis 3.2 Performance efficiency Inventory turnover, Unit: times Source: VIRAC 68

69 Content 3. Enterprise analysis 3.1 Profitability 3.2 Performance efficiency 3.3 Financial strength 3.4 Return on investment 69

70 3. Enterprise analysis 3.3. Financial strength Payment ratio, Source: VIRAC 70

71 3. Enterprise analysis 3.3. Financial strength Solvency, Source: VIRAC 71

72 Content 3. Enterprise analysis 3.1 Profitability 3.2 Performance efficiency 3.3 Financial strength 3.4 Return on investment 72

73 3. Enterprise analysis 3.4 Return on investment % Profit ratio, Source: VIRAC 73

74 REPORT DISCLAIMER Report disclaimer This document has been prepared in good faith on the basis of information available at the date of publication without any independent verification. VIRAC has produced this report for private circulation to professional clients only. All information and statistical data herein have been obtained from sources we believe to be reliable and made to ensure the accuracy of the contents of the pages of the report at the time of preparation. Such information has not been independently verified and VIRAC makes no representation or warranty, whether express or implied, of any kind with respect to the document and its contents, information and materials. The content found in this report is proprietary to VIRAC and is provided solely for your personal and non-commercial use. You agree that you will not use this report for any purpose that is unlawful and that you will not reproduce the report or redistribute it outside your organization, or place it on a website for public access without the express written permission of VIRAC. SHOULD YOU NEED ANY ASSISTANCE, PLEASE CONTACT US: VIETNAM INDUSTRY RESEARCH AND CONSULTANCY (VIRAC JSC.,) 6M h Floor, Anh Minh Building, 36 Hoang Cau, O Cho Dua, Dong Da, Hanoi, Vietnam Website: viracresearch@virac.com.vn Tel:

75 Thank you! 75