An Phat set to expand industrial zone portfolio to boost strength

Pham Van Tuan, CEO of An Phat Complex

The deal on purchasing Viet Hoa-Kenmark IZ was completed very quickly which had surprised the market. Could you share more about this transaction?

It is true that we had bought the abandoned IZ very quickly. After receiving the offer, we quickly set up a workgroup to study the project, providing deep analysis about its advantages and disadvantages. The “disadvantages” were numerous as the IZ was left deserted for years. Some people even said this IZ was the “congealed blood clot” of Hai Duong province. It is significant that we found the answer in these “disadvantages” and realised that the project is feasible, so we closed the deal.

At the time, no other investors dared to take the project, due to its risky nature. What were the factors behind the decision?

At An Phat, before taking part in any new project, we take into account three factors: first, the project must have good development potential; second, it holds the promise of future profitability; and finally the market demand must stay high. Through analyses, we found that this project satisfies all factors.

At the time, one of the main reasons Viet Hoa-Kenmark IZ failed to attract investors because no lenders dared to inject capital into the project due to its “bad history”. We also could not borrow from banks, so that we decided to mobilise our own capital for the project. The results, as people can see today, are this fast-growing project.

In addition, we have succeeded in optimising the usage of ready-built factory space at Viet Hoa-Kenmark IZ. With a nearly 20-year track record in production, we are confident we could restructure the factory space for sale or for rent, from there generating marginal profits.

After the deal, Viet Hoa-KenmarkIZ was renamed into An Phat Complex and posted quite impressive growth. What is APC’s recipe for success?

We took over the project in July 2018. At the time, the work volume was huge as the IZ had a poor material base with ready-built factory space covered in dust. The work related to legal setup, machinery removal, or sales and marketing was also significant.

Daily production at An Phat Complex

Overall, I am proud of being part of the fully committed An Phat team which has worked nearly double-time to change APC’s fate.

With ordinary projects, it is considered quick if we realise changes after a week, but with An Phat Complex, the changes could be felt day after day. We are committed to turning APC into a modern technology complex which is not only a base for An Phat’s state-of-the art production establishments, but is also an attractive destination to other domestic and foreign investors.

What has made APC such an attractive investment destination?

I know that many people, particularly our shareholders, have the concerns about how we managed to succeed so quickly in industrial real estate, which was a completely new field to us. However, as newcomers to the field, we came without the usual preconceptions and an openness of mind that allowed us to see a new, innovative approach that those who are familiar with this field could not.

Besides, selling land plots is not our prime target as we focus on developing and providing associated services. At APC, the investors have access to a wide range of solutions from financial and human resources matters to the settlement of administrative procedures, business registration, customs, and logistics.

Briefly speaking, when setting up shop at APC, investors can be at ease as we offer a complete ecosystem with full utilities to provide them utmost comfort.

APC has reportedly succeeded in leasing out 60 per cent of its space after less than one year, which is quite a good result compared to other IZs. How many customers does APC have now?

An overview of An Phat Complex

Let us take the example of one of our customers, Leo Paper Group, a leading paper maker in Hong Kong. Last year, Leo Paper signed a contract to lease our 50,000 square metre workshop to serve production. In the middle of this month, the group has leased an additional30,000sq.m space.

It is very much like the tourism industry, a visitor arrival is regarded a success, and making that visitor come back is absolute success, as it is a testimony to service excellence.

Another customer from Hong Kong has leased out our 11,000sq.m workshop space. We are also negotiating with a customer from Taiwan. If the transaction is successful, the customer will lease out 10 our workshop blocks.

After these deals, the current occupancy rate at APC is 55-60 per cent, and is expected to touch 75-80 per cent by the end of the year.

In the second quarter, APC has made active contributions to the impressive growth of profit of An Phat Bioplastics JSC, a member of An Phat Holdings and the owner of APC,which is expected to reach VND180 billion ($7.83 million) this year.

How do you envision APC’s growth perspective after two more years?

As of now, APC’s infrastructure is not be inferior to any other modern IZ. We have upgraded and built 4ha of additional workshop space and completed the foundation for four workshop areas. The entire IZ was served by a modern cable system and a full service package to serve investors.

We aim to turn APC into a hi-tech complex where An Phat’s modern R&D and production establishments converge, and also serve as an attractive destination to other domestic and foreign investors.

Amid the current shift in investment due to impacts from the US-China trade war, and with its favourable location near arterial roads, APC will surely enjoy further impressive growth.

After leasing out all IZ space, we will be focusing on boosting added values through providing a comprehensive suite of services to IZ investors.

APC was reported to be preparing to invest in another IZ next to its current position. Is this correct?

As industrial real estate is a new, promising field for us, there is a lot of merit in expanding its scope. We are planning to come up with a project on building Quoc Tuan An Binh IZ in Nam Sach district, Hai Duong province, which is in a convenient location next to An Phat Bioplastics.

The first-phase will start by 2020 and cover 180ha. The difference is that at this project we will focus on selling land plots but not develop workshop leasing services as we did at APC.