Mekong Capital officially sells 75 per cent holding in Loc Troi

Huynh Van Thon, chairman of Loc Troi, talked to VIR’s Thien Huong about the development orientation of his enterprise after its UPCoM listing.

Huynh Van Thon, chairman of Loc Troi

Previously, investors were very impressed by An Giang Plant Protection Joint Stock Company (the previous name of Loc Troi). Why did you rename your company in 2005 and what will Loc Troi focus on in the coming period?

Loc Troi was a small enterprise, established to serve farmers. However, the firm’s current strategy is not only to meet the needs of farmers, but also to become a partner to bring about sustainable development for all farmers, enterprises, and the society.

Thus, renaming the firm as Loc Troi was necessary because the old name could not cover all of our new strategy.

We are building a sustainable agricultural value chain, including commercial agricultural and value-added products, not only providing agricultural supplies as we used to do in the past.

Why did we choose the name “Loc Troi”? An Giang Plant Protection Company was established for farmers and its development today is thanks to farmers and the society. Thus, Loc Troi feels compelled to respond to their belief in our enterprise. The name reminds us to remain grateful towards farmers. We always remind ourselves that Loc Troi’s benefits are closely related to the benefits of farmers. We hope that people will understand and continue to support us in the future.

Our mission is to provide safe and qualified agricultural products, promoting sustainable agricultural production. Thus, providing plant protection products and bio-organic fertilisers is one of our main focuses.

We will continue to diversify by offering numerous products for various kinds of plants, expanding our market, cooperating with many partners in many forms, including mergers and acquisitions.

As you shift from meeting farmers’ demands to becoming their partner, will you stick to your strategy of “eat, live, and work with farmers”?

The strategy was our primary ambition when we decided to become a partner with farmers. We now have more than 1,200 young agricultural engineers to support farmers on their farms. Thanks to this support, farmers love and trust us and we are proud to say that we have contributed to the changes in their farming habits.

Loc Troi was the first company in Vietnam to apply a model of growing rice following the international standards of Sustainable Rice Platform, which was co-established by the United Nations and the International Rice Research Institute. We believe that we will contribute to the fame of Vietnamese rice in the world. Thereby, farmers and enterprises can earn proportionate to the work they spend on production.

Organic foods are one of the well-known trends currently. How will Loc Troi increase its market share to 30 per cent and will it be affected by this trend?

Organic farming is largely based on scientific study and many other factors. Regarding Loc Troi, we have kept developing our products with a bio-organic orientation.

Now we are cooperating with several leading enterprises in research, production, and supply of bio-organic products for agricultural production.

Every year, Loc Troi allocates a portion of its budget for research on seedlings, farming methods, as well as physical, mechanical, and biological methods to enhance the quality and safety of agricultural products and protect the environment. Our products have met the strict food safety requirements of more than 36 countries in the world, including the US and Japan.

Organic food is also one of our strategic development orientations and gives us a chance to meet the increasing demand of the Vietnamese market.

What will we do to increase our market share to 30 per cent? We and our main partner Syngenta Vietnam, a subsidiary of leading global agrochemicals and seed producer Syngenta Global, are building a new strategy to adapt the new trends as well as restructure the old business strategy.

We are expanding our market, diversifying products, increasing cooperation and partnerships. We are also enhancing and expanding our distribution system. At present, there are many big partners offering to cooperate with us, such as VinEco Agricultural Investment, Development and Productions LLC, and Hoang Anh Gia Lai JSC. They requested us to provide services and plant protection products on a large-scale.

Over the past three years, shareholders have seen decreasing revenues at Loc Troi. When will the restructuring period end? And why did you choose to be listed just now?

During 2006-2016, Loc Troi had good average growth rates of 13.66 per cent for revenue and 18.14 per cent for profit. However, since 2014, we have been slowing down to mend our weaknesses.

We have looked back at the loopholes in internal corporate governance that we have been ignoring for a long time to focus on fast development.

The competition in the market is getting more and more intense, which requires Loc Troi to implement significant changes to keep the lead. We have implemented our restructuring plan and finished the first phase of it.

We choose to be listed on this occasion because we want to follow the rules and enhance the standards of corporate governance, and increase the liquidity for our stocks. Additionally, we want to quickly approach long-term financing methods.

What can investors expect from Loc Troi in the coming period?

As I have said above, in past three years, Loc Troi has been working to solve numerous problems and implemented the restructuring plan for future development.

We have stopped investing into food production and this sector’s growth rate is rising.

In May 2017, we signed a contract to cooperate with a Chinese company to establish Seedlings and Commercial Agricultural Products Joint Venture Company, which paves the way for Vietnam’s high-quality agricultural products to approach the market in China, a highly potential market.

Besides, Loc Troi teamed up with other partners, such as Truong Hai Auto Corporation (THACO), to promote industrialisation in the rural areas. Along with a number of unpublished projects, Loc Troi will flourish in the coming period.

In the next five years, we will become a leading agricultural enterprise in Vietnam with the capitalisation of $1 billion. We pioneer in building, developing, and completing the agricultural value chain with the aim of providing safe and qualified agricultural products.

We hope to become the number one rice brand in the world and to build a value chain to produce coffee as well as develop certain va vegetables. Thereby, living standards in Vietnam will be enhanced, and we contribute to the promotion of domestic agriculture in a sustainable way.

In 2017, numerous enterprises have invested in agriculture. Looking back on your 24-year journey, do you think agriculture is an easy investment channel?

Virtually since day one, people have been asking me why I chose to invest in agriculture, an industry with low profit margins, high risk, and regular work with poor farmers. However, I think that every individual has his or her own destination and that is the reason of our lives.

Loc Troi’s reason for the existence is closely related to farmers, and you know that farmers are now very different than in the past. Once they learn, they learn very fast.

Our farmers now know how to produce rice or fruits with international sustainability standards. They have been participating in our programme of “Protecting the Environment with Farmers” for years.

We hope to raise the profit margin of the agricultural industry and income for farmers. To produce good results, every individual and enterprise has to do their jobs well. Loc Troi is proud and happy to do such a good job.