HO CHI MINH CITY -- Dairy giant Vietnam Dairy Products, better known as Vinamilk, said that net revenue from overseas markets rose 14% to 4.4 trillion dong ($197 million) in the first six months of 2016 from a year ago, as it unveiled plans to expand its reach in Asia.
Vinamilk had mostly focused on the domestic market in its 40-year history but it now hopes that overseas markets will contribute 50% to its revenue over the next five years. It is hoping to expand its overseas presence through mergers and acquisitions.
It is already working with strategic partners, including Topmost Enterprise in Thailand and Synchro World in Myanmar to promote Vinamilk products. It has also built its first dairy plant in Cambodia via its Angkor Dairy Products joint venture with BPC Trading Company that produces fresh milk, yogurt and condensed milk for the market.
In May, Vinamilk spent $3 million to buy the remaining 30% stake in California-based Driftwood Dairy, after its initial $7 million acquisition of a 70% stake in December 2013. Driftwood Dairy contributed 6.5% to Vinamilk's total revenue of $1.7 billion in 2015.
The group posted 4.9 trillion dong in net profit for the January-June period and 22.7 trillion dong in sales, representing an increase of 32% and 18% year-on-year, respectively. It said that changes in strategic product lines and low income tax contributed to the profit growth. Its earning per share is 3,740 dong, up 32% from a year ago.
However, its sales and adverting expenses still remain high, at 1.4 trillion dong and 888 billion dong during the period, representing an increase of 34% and 12% year-on-year, respectively.
In another move, the State Securities Commission of Vietnam on July 20 officially allowed Vinamilk to increase its foreign ownership limit from the current 49% to 100%.
SSI Securities Services said that this change would free up another 6% in the company for foreign buyers, assuming that the State Capital Investment Corp. clings on to its current stake of 45.06% and other overseas institutional shareholders also keep their holdings.
Analysts said that Vinamilk shares could then be added to the main exchange-traded funds in Vietnam, including FTSE Vietnam Index ETF and Market Vectors Vietnam ETF, in the next reviews at the end of August 2016. In the past, Vinamilk had failed to meet the free-float requirements of both ETFs.
Vinamilk is the fifth Vietnamese company that authorities had allowed foreign investors to buy into, after Saigon Securities Inc., Everpia Vietnam, Mirae and Vinh Hoan.