Bedding company Everpia, the only foreign-linvested listed firm in Vietnam's stock exhange, has just bought out its affiliate, the ailing cloths production firm Texpia JSC. Everpia deputy general director Yu Sung Dae shares with VIR’s Huu Hoe the considerations behind the deal and his confidence regarding the company’s ambitious targets for 2018.
|Yu Sung Dae |
Everpia’s investment into Texpia is at the risk of being utterly lost as the company keeps accummulating losses. Why did your company deicde not to divest Texpia or get rid of it through similar measure and instead went all-in and bought the whole project?
Last year, Everpia put as much as VND26 billion ($1.1 million) as provisions for its investment in Texpia. The decision to fully acquire Texpia aims to comprehensively deal with the issues at the company. After buying the entire assets, production lines, material and business rights, we will restructure Texpia and streamline its cloths production business in 2018.
This option is expected to yield better results for Everpia than other options.
What is the value of the deal?
In fact, Everpia did not buy Texpia in cash. Everpia has received all the assets, production lines, material and business rights of Texpia at a value equal to our investment and the sum we lent to Texpia in the past years.
In the last four months of last year, Texpia began to report actual profit. With Everpia’s strong reform measures, it is expected to earn around VND85 billion ($3.7 million) in revenue this year. This is one of the reasons that in the upcoming annual general shareholders’ meeting (the middle of this month) the company’s management board will seek approval for rather ambitious business targets.
In 2018, we want to go for VND1.1150 trillion ($51 million) in revenue and VND115 billion ($5 million) in after-tax profit, increases of 16 and 134 per cent against 2017.
In recent years, Everpia has been setting forth high business plans but often fell short of them. Could you elaborate on this year’s plans?
Everpia’s low performance in recent years has reduced investor confidence. As our current shareholder number rose sharply to around 3,000, we will do our utmost to garner their trust.
This year’s business plan has, therefore, been carefully conceived, leveraging existing order intake, meticulous calculations of contributions from our traditional production of bedding products, as well as new product lines for the first time embedded into Everpia’s product range (curtains and cloths of various kinds, etc.).
In the first two months of this year, we posted VND140 billion ($6.2 million) in revenue, a 62 per cent jump on-year, and counted VND9 billion ($400,000) in post-tax profit. We expect a 50 per cent jump in revenue and a 30 per cent jump in profit in the first quarter of this year, compared to the corresponding period last year.