Binh Minh Plastic sublimes in the hands of Thai investor

In the second quarter, the gross profit of Binh Minh Plastics JSC rose by 46.8%, to VND 572.7 billion. This is also the largest amount of money a business has ever made in a quarter.

In July, BMP's stock reached a high of VND 101,600 on the stock market. This helped the company's market value go up by more than VND 3,560 billion, to VND 8,300 billion. This helps Binh Minh Plastics keep its spot on the stock exchange as the most valuable company in the plastics business.

On top of profits

The big rise in BMP stock happened because the price of raw materials went down because of the downtrend of oil prices. This made people think that plastic companies would make more money. But Binh Minh Plastics' business results will still be a "phenomenon" when the Vietnamese plastic market drops in the second half of 2022.

Vietnam's plastics industry will grow by 1.9% in 2022, which is the lowest growth rate after more than a decade of growth of over 15% and in some years over 30%.

Even Binh Minh Plastic's competitor, Tien Phong Plastic, went into the red in the first quarter because of high costs and a lack of investment income. It is important to note that Tien Phong Plastic's income has always been better over the years. until Binh Minh Plastics caught up and passed it in 2020. Both of these businesses made thousands of billions of dong each year more than ten years ago.

Binh Minh Plastics' business reaching a new high point shows the successful presence of Thai shareholders, such as The Nawaplastic Industries (Saraburi), which is part of the Thai SCG Group.

This company owns 55% of the charter capital of Binh Minh Plastics, so it has the most shares. After investing in Binh Minh Plastics for more than 11 years, Thai owners made a profit of more than VND 1,800 billion, not counting dividends.

The name "Binh Minh Plastic" also shows that Thai people are getting ready to take over the Vietnamese plastic market for good. They have set up a professional distribution system in this area, which has a lot of promise. The Vietnam Plastics Association says that the business will make more than $25 billion in 2022, which is a 5.7% increase from the same time in 2021. Mr. Tee Bong Teong (BT Tee), who is the General Director of Informa Markets Vietnam, thinks that the rate of growth of plastic packaging will reach 15-20% between 2023 and 2028.

Thai people also put more money into the plastics industry as part of their plan to complete the environment of Thai businesses by using the value chain from inputs to outputs. Through mergers and acquisitions of retail systems in Vietnam, factories in many different areas, such as food, cement, and plastics, are linked to a large distribution network.

Thai people haven't been shy about wanting to take over Vietnam's plastic industry for a long time. They've done this by making a number of mergers and acquisitions (M&A) deals with Vietnamese companies like Ngoc Nghia, Bien Hoa Packaging, Duy Tan Plastic, Binh Minh Plastic, Tien Phong Plastic, and Tien Phong Plastic. Plastic Tin Thanh...

Setting up a production base in Vietnam also lets Thai investors take advantage of opportunities Vietnam creates when it signs new agreements, like EVFTA, UKVFTA, and RCEP, that make it easier for Vietnam to ship plastic products to other countries. The tax rate in member countries is either 0% or very close to 0%.

Link in Thai people's value chain

Mr. Nguyen Hoang Ngan, Vice Chairman of the Board of Directors for Binh Minh Plastics, said that the company's success was partly due to the steadiness of raw material prices and good business decisions. Analysis shows that this company's profit went up because the ratio of COGS to net sales dropped sharply. This happened when the average price of the main raw materials dropped sharply and the inventory was managed well.

Also, Binh Minh Plastics is part of the Group's ecosystem, which has 300 subsidiaries and affiliates around the world. Having a fairly methodical management system and being part of the Group's ecosystem has helped Binh Minh Plastics "makeover" when it was taken over by Thai people with many advanced management tools, such as supply chain management and production automation.

But the success of Binh Minh Plastics also shows how big businesses are better off financially and how they run than small ones. Analysts think that the profits of plastic businesses will continue to be very different and that they will become the playground of businesses with a strong cash flow from foreign investors and a big market share.

Notably, the Ministry of Industry and Trade's Development Plan for Vietnam's plastic industry through 2020, with a view to 2025, says that the plastic industry will be restructured to make packaging and household plastic goods less important over time. Gradually increase the amount of building materials and engineering plastics with special mechanical and mechanical qualities that are used in construction and industrial activities.

Binh Minh Plastics wants to make VND 6,357 billion in sales in 2023, which is 9% more than the previous year, and VND 651 billion after taxes, which is 6% less than the previous year. But the leaders of Binh Minh Plastics still think that 2023 will be a hard and uncertain year. In particular, the bad housing market made people less likely to buy plastic lines. The price of raw materials used to make plastic also changes a lot.

The company plans to bring in 9% more money, or VND 6,357 billion, but their profit after taxes will drop by 6%, to VND 651 billion. Binh Minh Plastics' business results are also expected to be bad because Vietnam's plastics industry has been showing signs of slowing down since the beginning of 2023. This is because of the global economic slowdown.

Experts from Viet Capital Securities Company (VCSC) say that 2023 will be a busy year for both local and international plastic demand. This means that the business results of plastic companies are more likely to go up. The bright spot is that income is expected to start going up again in 2024 and 2025.