Vinh Hoan Corp · HOSE:VHC
Vinh Hoan — Investor Presentation (March 2017)
29 slides from Vinh Hoan's investor presentation, Mar 1, 2017
Slide 1: The World's Leading Pangasius Company
VINH HOAN THE WORLD’S LEADING PANGASIUS COMPANY
Slide 2: Industry Dynamics
INDUSTRY DYNAMICS Top 10 companies accounted for 54% value of Vietnam pangasius industry in 2016 US$m VINH HOAN (VHC) 300 15% 251 250 BIENDONG 8% 200 Over 190 other 150 134 companies HUNG 102 101 46% VUONG 100 80 (HVG) 61 58 54 6% 45 45 50 Golden 0 Quality 6% GODACO NAVICO 2% TRUONG HUNGCA (ANV) GIA
Slide 3: Vinh Hoan: Leading Pangasius Company Since 2010
VINH HOAN: LEADING PANGASIUS COMPANY SINCE 2010 Top pangasius exporters by value (USD mn) 2008 2009 2010 2011 2012 2013 2014 2015 2016 Navico Hung VHC VHC VHC VHC VHC VHC VHC 188 Vuong 126 151 155 166 207 228 251 122 Hung VHC Hung Hung Hung Agifish Hung Biendong Biendong Vuong 115 Vuong Vuong Vuong
Slide 4: Comparables
COMPARABLES Attractive multiples and lower leverage compared to peer companies 18.0x EV/EBITDA 25.0x P/E 16.0x 14.0x 20.0x 12.0x 10.0x 15.0x 8.0x 6.0x 10.0x 4.0x 5.0x 2.0x 0.0x 0.0x NM NM Total Debt/Capital % 80% 70% 60% 50% 40% 30% 20% 10% 0% Note: Last twelve month basis Source: Capital IQ
Slide 5: 20 Years of Growth
20 YEARS OF GROWTH Started production Purchased Listed on of collagen & Thanh Binh HOSE gelatin Vinh Hoan Became the Processing was Total #1 pangasius Design capacity: capacity founded processing company approx. 2,000 MT expected by capacity: end of 2017: of finished products 150MT/day 900 MT/day p.
Slide 6: Our Core Values
OUR CORE VALUES 1. INTEGRATED BUSINESS MODEL 2. DIVERSIFIED PRODUCT PORTFOLIO 3. RENOWNED REPUTATION FOR QUALITY 4. SOLID AND EXPANDING CUSTOMER BASE 5. DEDICATED MANAGEMENT TEAM
Slide 7: Core Values: Integrated Business Model
CORE VALUES | 1. INTEGRATED BUSINESS MODEL Marketing and Hatchery Farm Processing Sales Hatchery area: 75 ha Grow-out farming area: 7 processing facilities for Ho Chi Minh City sales 400 ha fillets and value-added office Self-supply: approx. Raw materials self- products International 40% of fing
Slide 8: Core Values: Diversified Product Portfolio
CORE VALUES | 2. DIVERSIFIED PRODUCT PORTFOLIO Frozen fillets Pangasius Barramundi Tilapia Value-added products Ready-to-cook Ready-to-eat By-products Fish oil Fishmeal Fish fins Fish nuggets Hydrolyzed proteins extracted from fish skin Collagen Gelatin
Slide 9: Core Values: Renowned Reputation for Quality
CORE VALUES | 3. RENOWNED REPUTATION FOR QUALITY Products quality is ensured by strict compliance with international farming standards and modern processing facilities Responsible & sustainable certifications First pangasius First pangasius Total GAP-certified farm to receive ASC company to obtain f
Slide 10: Core Values: Solid and Expanding Customer Base
CORE VALUES | 4. SOLID AND EXPANDING CUSTOMER BASE Over 180 customers in over 40 countries Canada 34% Europe EU 15% 15% Japan (*) US China (*) 19% 37% 6% Hong Kong 30% Latin America (*) Australia 2% 28% % of VHC export value over total Vietnam export value 2016 (*) Growing markets
Slide 11: Core Values: Solid and Expanding Customer Base
CORE VALUES | 4. SOLID AND EXPANDING CUSTOMER BASE Sales contribution of Top 10 customers 2016 42% 2015 52% Reduced reliance on key customers No. of customers 9 2016 25 180 12 2015 28 170 50% 70% 100% % of sales
Slide 12: Core Values: Dedicated Management Team
CORE VALUES | 5. DEDICATED MANAGEMENT TEAM The Founder and Chairwoman – Mdm. Truong Thi Le Khanh- whose vision, innovations, and commitment has been the driving force behind the relentless growth of Vinh Hoan since its inception. A visionary, experienced and focused management team. Shareholders Sup
Slide 13: Going Forward....
GOING FORWARD....
Slide 14: Growth Potentials
GROWTH POTENTIALS Increasing demand for farmed freshwater fish as an affordable and sustainable source of protein World population 2050: 9.1bn Food supply: + 70% (*) Fish Production Projections: Growth in world aquaculture production by Aquaculture vs Capture species (2025 vs 2013-15) 48% 50% 47% 40
Slide 15: Growth Potentials
GROWTH POTENTIALS Vietnam accounts for > 95% of the US catfish 6th most consumed seafood in the US in 2015(2) imports(1) 299 Percentage of pangasius consumption/total seafood 247.62 consumption per capita in the US in 2015: 236.82 229.06 288 220 5% 224.52 237.12 CAGR of pangasius consumption (2011-2
Slide 16: Growth Potentials
GROWTH POTENTIALS Pangasius remains in the top growth of farmed species thanks to its high productivity, competitive price, good taste, and vast applications Pangasius is native to sustainable aquaculture: Highly commercial: Native to Mekong River Delta; White fillets, firm and flaky flesh; Di
Slide 17: Goal and Strategies
GOAL AND STRATEGIES Environmental and Economic Sustainability Branding Sales & Value-added Products Capacity Business Diversification Promote Free Trade
Slide 18: Strategies: Branding
STRATEGIES | 1. BRANDING In Aug 16, adopt new corporate identity with clear three-arm hierarchy to prioritize on each core business Deploy more efficient and consistent communication assets (e.g. company websites and social media assets)
Slide 19: Strategies: Sales and Value-Added Products
STRATEGIES | 2. SALES AND VALUE-ADDED PRODUCTS In 2016, forged into 5 new markets in 2016, expanding sales network to 180 Increase footholds in customers over 40 nations existing markets and Entered Spain’s largest supermarket chain - Mercadona’s shelves in Dec 16 develop new markets 2016 58% 16% 10
Slide 20: Strategies: Sales and Value-Added Products
STRATEGIES | 2. SALES AND VALUE-ADDED PRODUCTS Increase footholds in US EU Australia existing markets and develop new markets Promote free trade Increase market Direct sales of Vietnam share in high-end Branding pangasius segments Expand sales of Develop other strategic Develop sales for
Slide 21: Strategies: Sales and Value-Added Products
STRATEGIES | 2. SALES AND VALUE-ADDED PRODUCTS China Latin America Japan Increase foothold in existing markets and develop new markets Direct sales of Direct sales Develop high-end premium products Promote product segments to retailers and quality and food Develop value- Develop other stra
Slide 22: Strategies: Sales and Value-Added Products
STRATEGIES | 2. SALES AND VALUE-ADDED PRODUCTS • 7 new VAD products in 2016: 1 ready-to-eat and 6 ready-to-cook. Increase footholds in • 2 ready-to-cook products made into final list for “New Products” award existing markets and at 2 largest seafood tradeshows in Boston and Brussels. develop new mar
Slide 23: Strategies: Capacity Expansion
STRATEGIES | 3. CAPACITY EXPANSION Maintain self-supply ratio at approx 65%, in 2016: 64%. Prioritize expanding farming area certified with international farming standards Raw material capacity (ASC, Global GAP, BAP): • Vinh Aquaculture division specializes in training and supporting contracted farm
Slide 24: Strategies: Business Diversification
STRATEGIES | 4. BUSINESS DIVERSIFICATION Collagen & Gelatin Other seafood M&A The first company In Jan 2017, purchased 100% shares of produces single-source Thanh Binh Dong Thap collagen peptide and Synergies: gelatin from pangasius • Location skin • Human resources (direct labor, technical and mana
Slide 25: Strategies: Promote Free Trade
STRATEGIES | 5. PROMOTE FREE TRADE Promote free trade • Track record of campaigning against unfair trade defence • The only Vietnamese pangasius company enjoys 0% anti- dumping duty in the U.S market. • Coordinator between NAFIQAD and professional consultant supporting NAFIQAD during the preparation
Slide 26: Business Performance and Forecast
BUSINESS PERFORMANCE AND FORECAST (+44% yoy) 950 (+12% yoy) 832 9220 7,304 6,307 6,493 552 576 5,095 14% 4,228 26% 334 331 CAGR: 26% CAGR: 15% 2012 2013 2014 2015 2016 2017F 2012 2013 2014 2015 2016 2017F Net revenue (VND bn) EBITDA (VND bn) 335 250 274 2017F 196 233 174 22% Expansion of farming are
Slide 27: Business Plan
BUSINESS PLAN Revenue and Gross Profit Margin by Products Product Name Revenue (VND bn) Revenue (USD mn) Gross Profit Margin (%) Frozen pangasius fillets 6,682 291 17% Fishmeal, fish oil and other by- 1,577 69 1% products Value-added products 198 9 27% Collagen, Gelatin 118 5 13% Fish feed 345 15 6%
Slide 28: Share Info & Shareholders Structure
SHARE INFO & SHAREHOLDERS STRUCTURE Outstanding shares: 92.3m Treasury shares: 0.2m Foreign ownership limit: 100% Current foreign ownership: 28% SHAREHOLDERS STRUCTURE (as of Nov 21, 2016) Others, Mdm. 44.16% Khanh, 49.32% Dragon Capital, 6.52%
Slide 29: Disclaimer
Disclaimer This presentation contains “forward-looking” statements regarding the business operations and prospects of Vinh Hoan Corporation (the “Company”) and industry factors affecting it. These statements are identified by words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “co