VIETNAM CEMENT INDUSTRY REPORT Q3/2018...2.2 Vietnam cement industry 2.3 SWOT analysis 2.4 Industry...

VIETNAM CEMENT INDUSTRY REPORT Q3/2018

1

Content

2

Summary 4

1. Business environment 6

1.1 Macroeconomic situation 6

1.2 Legal framework 12

2. Industry overview 20

2.1 World cement industry 20

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 26

2.2.3 Basic production process 27

2.2.4 Scale and market share 29

2.2.5 Supply-Demand 31

2.2.6 Cement and clinker export 32

2.2.7 Price movement 38

2.3 SWOT analysis 42

2.4 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 67

3.3 Financial strength 70

3.4 Return on investment 72

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 purposeVietnam cement market continues to have

excess supply

In 6M/2018, the number of produced

cement was estimated about xx.xx million

tons.

The quantity of exported cement and clinker

in 6M/2018 reached xx.xx million tons

5

Summary

Content is intentionally removed for demo purpose

Selling products directly to projects and

industrial customers will be a new trend in this

sector in few next years

In 2017, cement industry experienced

difficulties with decrease in revenue and high

inventory quantity.

The demand is projected to gradually increase

by x-x% between 2016 - 2020

6

1. Business environment

1.1 Macroeconomic situation

1.2 Legal framework

Content

7

Sources: VIRAC, GSO

Sources: VIRAC, GSO

Total gross domestic product in 6M/2018 is estimated to increase by x.xx%

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, 2013-6M/2018

GDP growth rate by quarter, 2015- Q2/2018





1.1. Macroeconomic situation

8

Source: VIRAC, SBV

Source: VIRAC, GSO

%

Industrial production index of the manufacturing, 2012 – 6M/2018

VND/USD exchange rate, 2013-6M/2018


The VND/USD exchange rate was quite stable and still supported

by a plentiful supply of foreign currencies.

9

Source: VIRAC, GSO

Source: VIRAC, GSO

trillion VND

trillion VND



State revenues, 6M/2018

Government expenditures, 6M/2018

State revenues and expenditures


Sources: VIRAC, GSO

11




Structure of social investment capital, 6M/2018

The rate of development of social investment capital in the first

six months, 2015 - 2018

11

Sources: VIRAC, FIA

Sources: VIRAC, FIA

FDI attraction by sector, Q1/2018

FDI capital, 2014 – 6M/2018Billion USD

Foreign direct investment




12



1.2 Legal framework

Content


1.2 Legal framework - Group of general regulations

13

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

14

Advantages Disadvantages

WHRPG system:

WHRPG Funds:


15

Decree No. 177/2013 / ND-CP


1.2 Legal framework - Group of price regulations



1.2 Legal framework - Group of price regulations

16

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

17


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

18


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

19


20

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

21

Source: VIRAC, Statista

Cement production in Asia is leading the world,

Cement production by region 2017e

Global Cement Production, 2011 – 2017e


Million tons

China is currently the largest cement producer in the world,

No CountryProduction volume

(million tons)

22

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

23

Source: VIRAC, International Cement Review

Global Cement Consumption, 2010 – 2018e

Consumption structure of cement worldwide, 2017e


Million tons

24




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 ...)

25



2.2 Vietnam cement industry – 2.2.2 Definition and Classification

26

Definition:

Clinker

Cement

Classification

Vietnam commonly used standards on cement today:


27


2.2 Vietnam cement industry – 2.2.3 Basic production process



2.2 Vietnam cement industry – 2.2.3 Basic production process

28



2.2 Vietnam cement industry – 2.2.4 Scale and market share

Source: VIRAC, GSO

29

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

30

Consumption market share of key enterprises, 6M/2018e



2.2 Vietnam cement industry – 2.2.5 Supply-Demand

31

Source: VIRAC, VNCA

million tons

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

Cement supply - demand, 2011 – 6M/2018e



2.2 Vietnam cement industry – 2.2.6 Cement and clinker export

32


World’s top largest cement exporting countries,

2016 – 2017e

Source: VIRAC, Uncomtrade

Country 2016 2017e

Average cement export price of Vietnam to some markets,

6M/2018e

Source: VIRAC, GDVC



33

million tons

Source: VIRAC, VNCA

Cement clinker exports, 2010 –6M/2018e




34

Thousand tons

Source: VIRAC, GDVC

Cement clinker exports, 1/2015 – 6/2018e




35

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 -6M/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

36

Million tons/year


In 6M/2018, for the export of cement directly, Nghi Son, Vincem Bim Son

and Thang Long are the three largest exporting enterprises,

Sources: VIRAC, VNCA

37

Sources: VIRAC, VNCA

The enterprises export cement directly, 6M/2018e

Exporters of clinker directly, 6M/2018e




2.2 Vietnam cement industry – 2.2.7 Price movement

38

thousand VND/ton

Sale price of cement at some cement companies, 6M/2018

thousand VND/ton

Retail price of cement in the areas, 6M/2018




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

Source: VIRAC, ICR

39

USD/ton Cement price, 2012 – 2018e


Export price



Source: VIRAC, Department of

Price Management

40

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


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2.3 SWOT analysis



Content

Strength:

Weakness:


2.3 SWOT analysis

42


Opportunities:

Threats:


2.3 SWOT analysis

43


44




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.

45



2.4 Industry planning – 2.4.1 Cement industry planning

46


47




2.3 SWOT analysis



Content


2.5 Outlook and forecast – 2.5.1 Driving forces of industry development

48



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

49

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

50


3.1 Typical enterprises in 2017

Name of enterprise Classification Address

Charter

capital

(million

VND)

Revenue in 2016

(million VND)

1 Ha Tien 1 Cement Joint Stock Company

2 Nghi Son Cement Company

3 The Vissai Cement Corporation

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 2017

Source: VIRAC

51



Ha Tien 1 Cement Joint Stock Company

52




The Vissai Cement Corporation

53

The Vissai Cement Corporation



Nghi Son Cement Company

54

Nghi Son Cement Company



VICEM Hoang Thach Cement Company Limited

55

VICEM Hoang Thach Cement Company Limited



Bim Son Cement Joint Stock Company

56

Bim Son Cement Joint Stock Company



VICEM But Son Cement Joint Stock Company

57

VICEM But Son Cement Joint Stock Company



Thang Long Cement Joint Stock Company

58

Thang Long Cement Joint Stock Company



VICEM Hoang Mai Cement Joint Stock Company

59

VICEM Hoang Mai Cement Joint Stock Company



Quang Ninh Cement and Construction Joint Stock Company

60

Quang Ninh Cement and Construction Joint Stock Company




61

Sai Son Cement Joint Stock Company


Content


3.1 Profitability




62


3.1. Profitability

63

Source: VIRAC

Million VND Net revenue, 2016 - 2017



3.1. Profitability

64



3.1. Profitability

65

Source: VIRAC

Million VNDGross profit, 2016 - 2017


Content


3.1 Profitability




66



Source: VIRAC

67

Source: VIRAC

Unit: times Unit: times

Fixed asset turnover, 2016 - 2017Total asset turnover, 2016 - 2017




68

Source: VIRAC

Unit: timesInventory turnover, 2016 - 2017


Content


3.1 Profitability




69


3.3. Financial strength

70

Source: VIRAC

Payment ratio, 2016 - 2017



3.3. Financial strength

71

Source: VIRAC

Solvency, 2016 - 2017


Content


3.1 Profitability




72



73

Source: VIRAC

%Profit ratio, 2016 - 2017


REPORT DISCLAIMER

Report disclaimer

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independent verification. VIRAC has produced this report for private circulation to professional clients only. All information and

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VIETNAM CEMENT INDUSTRY REPORT Q3/2018...2.2 Vietnam cement industry 2.3 SWOT analysis 2.4 Industry...

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