An Phat Holdings makes fresh move towards sustainable development

08:00 | 23/04/2020
Besides An Phat Bioplastics JSC – a key member and a big income earner for An Phat Holdings (APH) which operates in packaging production – the group’s parent company has also made efforts to diversify operations, making plastics its core business line while simultaneously doubling down on the segments of compostable products and supporting industry for its medium- and long-term strategy to promote the sustainable development in the next 3 to 5 years.    

Since 2013, An Phat Bioplastics JSC (ticker symbol:AAA) has ventured into the research and development of environmentally friendly product lineups. At the time, AAA financed a project of a local university to create eco-friendly items. The project, however, ended at failure. Since then, the parent company (APH) has made research and development its priority investment field, a fresh and challenging area where no local firms have managed to post success.

After two years of study, in 2015 AAA has reported initial success, becoming the first Vietnamese firm capable of producing compostable items that meet stringent global requirements. The company’s products have made forays into markets around the world such as France, Romania, Italy, Australia, and the US.

an phat holdings makes fresh move towards sustainable development
An Phat Holdings' compostable items are used widely by leading local and global brands

On its home turf, APH’s compostable  items under the AnEco brand often carry a heftier price tag compared to most items on the market due to higher investment costs for material import, technology investment, R&D, and quality control. Making items more affordable has since been a primary target for APH’s management.

To solve the conundrum, in June 2019 APH teamed up with a South Korean partner to acquire the patents of compostable materials, which is a core part of production costs. Through acquiring the patent, APH aims to build a compostable material manufacturing plant in Vietnam, striving to significantly lower production costs.

Currently, the group’s compostable products are used by leading brands in Vietnam such as Highlands Coffee, Daewoo Hotel, Lotte Hotel, The Coffee House, Maian Bakers, Soc & Brothers, and can be seen at the shelves of diverse supermarkets and hotels like Vinmart, Circle K, AEON, and Lotte Mart, Vinpearl. With an ever-increasing number of partners are mulling over promoting the use of environmentally friendly items, APH’s development prospects are looking bright indeed.

According to Vo Duy Phu, Business and Marketing director at The Coffee House – a loyal customer of APH – the coffee chain has set forth the target of cutting the emission of hardly degradable plastic by up to 80 per cent.

“The engagement of The Coffee House reflects the sustainable development values the company aims for, while simultaneously inspiring customers to change their habits of plastic use, particularly single-use plastic items,” said Phu.

During 2020-2025, APH expects compostable bags will drive the development of this whole segment as traditional plastic items will be gradually replaced by fully compostable products.

Currently, APH is building a factory to manufacture compostable items in the US, with the target of pushing up exports to North America in the near future. The opportunity for success is big as the US administration is offering better incentives to investors from other countries who engage in making green products.

During 2020-2025, APH expects compostablebags will drive the development of this whole segment as traditional plastic items will be gradually replaced by fully biodegradable and compostable products.

Promoting supporting industry as production shifts to Vietnam

Aside with making green products, APH has been taking bold steps to venture into the supporting industry which is generally seen as a difficult area to invest for most local companies due to the large investment needed to ensure the necessary finance, science  and technology capabilities.

Five APH member units – Hanoi Plastics JSC (NHH), Anh Trung Industries Co., Ltd. (ATI), Vinfast-An Phat Plastic Auto Part Co., Ltd. (VAPA), Vietnam Pattern Manufacture and Precision Mechanical Co., Ltd. (VMC), and Export Import Development Investment Co., Ltd. (Viexim) – are expected to provide the fulcrum to deepen APH’s engagement in the global supply chains.

Along with this, NHH has developed a sound customer base in the auto-motorcycle industry such as Honda, Toyota, VinFast, and other famous brands in the electric and electronic industries like Panasonic and LGE, whereas AIT has signed contracts with Samsung and Brother.

an phat holdings makes fresh move towards sustainable development
APH aims to double the production capacity of VMC factory in the near future

Aside with making green products, APH has been taking bold steps to venture into the supporting industry which is generally seen as a difficult area to invest for most local companies due to the large investment needed to ensure the necessary finance, science  and technology capabilities.

Five APH member units – Hanoi Plastics JSC (NHH), Anh Trung Industries Co., Ltd. (ATI), Vinfast-An Phat Plastic Auto Part Co., Ltd. (VAPA), Vietnam Pattern Manufacture and Precision Mechanical Co., Ltd. (VMC), and Export Import Development Investment Co., Ltd. (Viexim) – are expected to provide the fulcrum to deepen APH’s engagement in the global supply chains.

Along with this, NHH has developed a sound customer base in the auto-motorcycle industry such as Honda, Toyota, VinFast, and other famous brands in the electric and electronic industries like Panasonic and LGE, whereas AIT has signed contracts with Samsung and Brother.

In the field of moulding, VMC supplies the market with 200-250 moulds per year which will double to 500 units in the future, driven by ambitions to become one of the leading players in its field. Having a mould manufacturing factory will help APH take the initiative in design, manufacturing, and maintenance activities, curtailing the time and costs of parts and accessories production.

APH started to see the sweet fruits of its investments in its member companies from 2019. Accordingly, last year NHH (the parent company of ATI, VMC, VAPA, and Viexim) raked in VND1.233 trillion ($53.6 million) in consolidated revenue, surpassing its annual target by 9 per cent and recording a nearly 20 per cent jump on-year. Its profit was up 12 per cent on-year, reaching VND68 billion ($2.96 million).

The 2018-2019 period marked APH’s great success as the group has become partner to a raft of global tech giants like Samsung and Brother, and attracted fresh partners such as Lear and STM.

In the forthcoming time, APH aims to strengthen co-operation with the Ministry of Industry and Trade, Samsung Vietnam, and Hai Duong authorities to deploy new plans on supporting industry development.

According to APH executives, during the 2020-2025 period, all member units will ramp up efforts to master production technologies, ensuring that the factories be running at full capacity to optimise production costs.

In addition, APH set out to list on the stock market and grab $250 million from its initial public offering (IPO) proposed to take place in the near future. The group aims to enact maximally 20 million stock in three rounds with the starting price not lower than VND25,000 ($1.09) apiece.

The proceeds would be used to build a high-tech factory manufacturing biodegradable materials at Nam Dinh Vu Industrial Park in the northern port city of Haiphong.

By Anh Duc

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