Indonesian firm mulls Hanoimilk bid

Workers at a Hanoimilk factory. The dairy is reportedly a target for Indonesia's Tiga Pilar Sejahtera Food. Photo vnexpress.net

The ASEAN company is planning to invest US$80 million in food producers in Viet Nam and Malaysia, Vietstock.vn quoted Asian-agribiz as saying.

Tiga Pilar is among the largest biscuit producers in Indonesia, has market shares in rice and packed noodles. It also has palm farms. In 2013, sales reached $390.2 million and net profit was $33.3 million. Its total assets are now $413.1 million.

Sjambiri Lioe, Tiga Pilar's finance director, said that negotiations with Hanoimilk would be completed shortly.

Barry Weisblatt, VPBank Securities' Head of Research Department, said that Tiga Pilar hoped to expand its annual profit by $18.8-23.5 million by selling Hanoimilk's products in Indonesia.

The company has seen a decline in sales and it has also been short of capital to improve product quality and develop its own cattle farm of 2,000 cows in Me Linh District, worth VND380 billion ($18 million).

Last year, Hanoimilk recorded a net income of VND222 billion, a slight decrease of 5 per cent over 2013. However, its net profit share fell by VND3 billion in 2013 to VND161 million last year. In addition, the company's earnings per share (EPS) was only VND13 per share.

Hanoimilk, founded in 2001, used to be one of top three dairy producers in Viet Nam. However, it has gone downward due to faulty business strategies and the negative impacts caused by a Melamine incident seven years ago.

The company will have a great opportunity to get access to 10 other countries in the region as the ASEAN Economic Community officially comes into being at the end of this year.

Viet Nam's dairy market is becoming hotter as there are many domestic and foreign companies. According to the VOF Investment Fund (VinaCapital), each Vietnamese person consumes an average of 14 litres of milk each year, which is half of the region's average consumption.

Last year, the VOF Fund and Daiwa PI spent $45 million to buy 70 per cent of stakes in the International Dairy Products (IDP). Thus, IDP targets a growth rate of 50 per cent this year and 25 per cent for the next three years.

Elsewhere, another domestic player, TH Milk also acquired the Dalat Milk to expand its cattle farm.