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VIETNAM CEMENT INDUSTRY REPORT Q2/2018

1

Content

Summary 4

1. Business environment 6

1.1 Macroeconomic situation 6

1.2 Legal framework 12

2. Industry overview 21

2.1 World cement industry 21

2.1.1 Production 21

2.1.2 Consumption 24

2.2 Vietnam cement industry 25

2.2.1 History of Vietnam cement industry 25

2.2.2 Definition and Classification 27

2.2.3 Basic production process 28

2.2.4 Scale and market share 30

2.2.5 Supply-Demand 32

2.2.6 Cement and clinker export 33

2.2.7 Price movement 39

2.3 SWOT analysis 42

2.4 Cement industry planning 45

2.5 Outlook and forecast 48

2.5.1 Driving forces of industry development 49

2.5.2 Driving forces of output industry development 50

3. Enterprise analysis 51

3.1 Profitability 63

3.2 Performance efficiency 66

3.3 Financial strength 69

3.4 Return on investment 72

2

3

ADB Asian Development Bank

BOT Build – Operate - Transfer

EVN Vietnam Electricity Corporation

FDI Foreign Direct Investment

FIA Foreign Investment Agency

ICR International Cement Review

Abbreviations

PPP Public – Private Partner

GDVC General Department of Vietnam Customs

GSO General Statistics Office of Vietnam

TKVVietnam National Coal and Mineral Industries Holding

Corporation Limited

VICEM Vietnam Cement Industry Corporation

VIRAC VIRAC Joint Stock Company

VNCA Vietnam National Cement Association

4

Summary

Content is intentionally removed for demo purpose

Vietnam cement market continues to have

excess supply

In Q1/2018, the number of produced

cement was estimated about 14.965 thousand

tons.

The quantity of exported cement and clinker

in Q1/2018 reached 8.61 million tons

5

Summary


Selling products directly to projects and

industrial customers will be a new trend in this

sector in few next years

.

Three groups of cement suppliers in Vietnam:

Sales strategy:

Production expenses:

6

Summary

Content is intentionally removed for demo purposeIn 2016, cement industry experienced

difficulties with decrease in revenue and high

inventory quantity.

The demand is projected to gradually increase

by 6-7% between 2016 and 2020

7

1. Business environment

1.1 Macroeconomic situation

1.2 Legal framework

Content

8

Sources: VIRAC, GSO

Sources: VIRAC, GSO




gross domestic product in Q1/2018 is estimated to increase by 7.38%

compared to the same period in 2017

GDP per capita has increased strongly over the past few years.GDP by current price and GDP per capita, 2013-Q1/2018

GDP growth rate by quarter, 2015- Q1/2018


1.1. Macroeconomic situation

9

Source: VIRAC, SBV

Source: VIRAC, GSO

%


Industrial production index of the manufacturing, 2012 – Q1/2018

VND/USD exchange rate, 2013-Q1/2018 The VND/USD exchange rate was quite stable and still supported

by a plentiful supply of foreign currencies.

10

Source: VIRAC, GSO

Source: VIRAC, GSO

trillion VND

trillion VND




State revenues, Q1/2018

Government expenditures, Q1/2018

State revenues and expenditures

Sources: VIRAC, GSO

11




The investment capital for society development by current

prices for economic sectors, 2010 – 2016e

The rate of development of social investment capital increasing

at current prices, 2015 - 2018

12

Sources: VIRAC, FIA

Sources: VIRAC, FIA

Foreign direct investment




FDI attraction by sector, Q1/2018

FDI capital, 2014 – Q1/2018Billion USD

13



1.2 Legal framework

Content


1.2 Legal framework - Group of general regulations

14

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):



1.2 Legal framework - Group of general regulations

15

Advantages Disadvantages

WHRPG system:

WHRPG Funds:


16

Decree No. 177/2013 / ND-CP


1.2 Legal framework - Group of price regulations



1.2 Legal framework - Group of price regulations

17

Tax policy:



1.2 Legal framework - Group of environmental and resources regulations

No Parameter

Concentration C (mg/m³)

A B1 B2

Type of resourceTaxation

(%)

Applicable tax

rate (%)

Taxable

Items

Unit Tax rate raised by

National Assembly

(VND/unit)

Tax rate raised

by the Standing

Committee

Environmental Protection Tax (EPT)

Natural Resources Tax (NRT)

Environmental Protection Tax applied since 1/2012

Natural Resources Tax applied since 2/1/2014

18


However, the tax rate on the resources has been reacted strongly by the business

19


1.2 Legal framework - Group of environmental and resources regulations



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:

No Item Export tax rate (%) Import tax rate (%)

Decree No.122/2016/ND/CP

Import and Export Tariffs applied since 2016

20


21

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

Content


2.1 World cement industry – 2.1.1 Production

22

Source: VIRAC, Statista

Cement production in Asia is leading the world,

Cement production by region 2016e


Million tons

Global Cement Production, 2011 – 2017e

China is currently the largest cement producer in the world,

No CountryProduction volume

(million tons)

23

Cement production output of some countries, 2017

Sources: VIRAC, Statista

Sources: VIRAC, Statista

Top largest cement producing countries, 2017e


2.1 World cement industry – 2.1.1 Production



2.1 World cement industry – 2.1.2 Consumption

Source: VIRAC, Global Cement

24

Source: VIRAC, International Cement Review

Global Cement Consumption, 2010 – 2018e

Consumption structure of cement worldwide, 2016


Million tons

25




2.3 SWOT analysis



Content


2.2 Vietnam cement industry – 2.2.1 History of Vietnam cement industry

Cement industry is one of the earliest established industries in

Vietnam (along with coal, textile, railway ...)

26



2.2 Vietnam cement industry – 2.2.2 Definition and Classification

27

Definition:

Clinker

Cement

Classification

Vietnam commonly used standards on cement today:


28


2.2 Vietnam cement industry – 2.2.3 Basic production process



2.2 Vietnam cement industry – 2.2.3 Basic production process

29



2.2 Vietnam cement industry – 2.2.4 Scale and market share

Source: VIRAC, GSO

30

Manufacturing enterprises allocation by region, 2016e

Chain allocation by area, 2017



2.2 Vietnam cement industry – 2.2.4 Scale and market share

There are three main groups of cement suppliers in Vietnam:

Source: VIRAC, VNCA

31

Consumption market share of key enterprises, Q1/2018e



2.2 Vietnam cement industry – 2.2.5 Supply-Demand

32

Source: VIRAC, VNCA

million tons

* Supply = total output of cement production; Demand = domestic cement consumption + export output of cement, clinker


Cement supply - demand, 2011 – Q1/2018e


2.2 Vietnam cement industry – 2.2.6 Cement and clinker export

33

World’s top largest cement exporting countries,

2016 – 2017e

Nguồn: VIRAC, Uncomtrade

Country 2016 2017e

Average cement export price of Vietnam to some markets,

Q1/2018e

Source: VIRAC, GDVC


34

million tons

Source: VIRAC, VNCAContent is intentionally removed for demo purpose



Cement clinker exports, 2010 –Q1/2018e

35

Thousand tons

Source: VIRAC, GDVC




Cement clinker exports, 1/2015 – 3/2018e

36

Source: VIRAC, GDVC

In 2017, the main export markets for cement and clinker are Bangladesh and the Philippines.

million tons




Export markets for cement and clinker, 2015 -Q1/2018e

The cement exporters of Vietnam are divided into 2 types:

Cement manufacturers:

Trading company :

Capacity of cement manufacturers for export in 2016

Source: VIRAC, VNCA

37

million

tons/year




Sourcces: VIRAC, VNCA

38

Sources: VIRAC, VNCA



In Q1/2018, for the export of cement directly, Vicem But Son, Nghi Son

and Vincem Bim Son are the three largest exporting enterprises,

The enterprises export cement directly, Q1/2018e

Exporters of clinker directly, Q1/2018e

39

VND thousand/ton

VND thousand/ton



2.2 Vietnam cement industry – 2.2.7 Price movement

Generally in Q1/2018, cement price slightly increased

Sale price of cement at some cement companies, Q1/2018 Retail price of cement in the areas, Q1/2018



Source: VIRAC, ICR

40

USD/ton


Cement price in Vietnam is much lower than that of other countries in the region and the world average price.

Cement price, 2012 – 2018e

Export priceSource: VIRAC, Department of

Price Management

41

USD/tonExport price of cement and clinker, 6/2015 - 3/2018




42




2.3 SWOT analysis



Content


2.3 SWOT analysis

43


Strength:

Weakness:


2.3 SWOT analysis

44


Opportunities:

Threats:

45




2.3 SWOT analysis



Content


2.4 Industry planning – 2.4.1 Cement industry planning

Decision No. 1488/QD-TTg of the Prime Minister approving the planning on development of Vietnam cement industry.

46



2.4 Industry planning – 2.4.1 Cement industry planning

47


48




2.3 SWOT analysis



Content


2.5 Outlook and forecast – 2.5.1 Driving forces of industry development

49



2.5 Outlook and forecast – 2.5.2 Driving forces of output industry development

50

Population growth, 2011 – 2017e

Forecast for value of construction and infrastructure,

2010 – 2022f

Source: VIRAC

Source: VIRAC, GSO


Content

3. Enterprise analysis

3.1 Profitability

3.2 Performance efficiency

3.3 Financial strength

3.4 Return on investment

51


3.1 Typical enterprises in 2015

Name of enterprise Classification Address

Charter

capital

(million

VND)

Revenue in 2016

(million VND)

1 Ha Tien 1 Cement Joint Stock Company

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

8VICEM Hoang Mai Cement Joint Stock

Company

9Quang Ninh Cement and Construction Joint

Stock Company

10 Sai Son Cement Joint Stock Company

Top 10 cement enterprises with the highest revenue in 2016

Source: VIRAC

52



Ha Tien 1 Cement Joint Stock Company

53




The Vissai Cement Corporation

54

The Vissai Cement Corporation



Nghi Son Cement Company

55

Nghi Son Cement Company



VICEM Hoang Thach Cement Company Limited

56

VICEM Hoang Thach Cement Company Limited



Bim Son Cement Joint Stock Company

57

Bim Son Cement Joint Stock Company



VICEM But Son Cement Joint Stock Company

58

VICEM But Son Cement Joint Stock Company



Thang Long Cement Joint Stock Company

59

Thang Long Cement Joint Stock Company



VICEM Hoang Mai Cement Joint Stock Company

60

VICEM Hoang Mai Cement Joint Stock Company



Quang Ninh Cement and Construction Joint Stock Company

61

Quang Ninh Cement and Construction Joint Stock Company




62

Sai Son Cement Joint Stock Company


Content


3.1 Profitability




63


3.1. Profitability

64

Source: VIRAC

million VND Net revenue growth, 2015 - 2016



3.1. Profitability

65

Source: VIRAC

million VNDGross profit growth, 2015 - 2016


Content


3.1 Profitability




66



Source: VIRAC

67

Source: VIRAC

Unit: times Unit: times

Fixed asset turnover, 2015 - 2016Total asset turnover, 2015 - 2016




68

Source: VIRAC

Unit: timesInventory turnover, 2015 - 2016


Content


3.1 Profitability




69


3.3. Financial strength

70

Source: VIRAC

Payment ratio, 2015 - 2016



3.3. Financial strength

71

Source: VIRAC

Solvency, 2015 - 2016


Content


3.1 Profitability




72



73

Source: VIRAC

%Profit ratio, 2015 - 2016


REPORT DISCLAIMER

Report disclaimer

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