VIETNAM CEMENT INDUSTRY REPORT Q1/2018 · 2018. 5. 4. · 2.3 SWOT analysis 42 2.4 Cement industry planning 45 2.5 Outlook and forecast 48 2.5.1 Driving forces of industry development

VIETNAM CEMENT INDUSTRY REPORT Q1/2018

1

Content

Summary 4

1. Business environment 6

1.1 Macroeconomic situation 6

1.2 Legal framework 12

2. Industry overview 21

2.1 World cement industry 21

2.1.1 Production 21

2.1.2 Consumption 24

2.2 Vietnam cement industry 25

2.2.1 History of Vietnam cement industry 25

2.2.2 Definition and Classification 27

2.2.3 Basic production process 28

2.2.4 Scale and market share 30

2.2.5 Supply-Demand 32

2.2.6 Cement and clinker export 33

2.2.7 Price movement 39

2.3 SWOT analysis 42

2.4 Cement industry planning 45

2.5 Outlook and forecast 48

2.5.1 Driving forces of industry development 49

2.5.2 Driving forces of output industry development 50

3. Enterprise analysis 51

3.1 Profitability 63

3.2 Performance efficiency 66

3.3 Financial strength 69

3.4 Return on investment 72

2

3

ADB Asian Development Bank

BOT Build – Operate - Transfer

EVN Vietnam Electricity Corporation

FDI Foreign Direct Investment

FIA Foreign Investment Agency

ICR International Cement Review

Abbreviations

PPP Public – Private Partner

GDVC General Department of Vietnam Customs

GSO General Statistics Office of Vietnam

TKVVietnam National Coal and Mineral Industries Holding

Corporation Limited

VICEM Vietnam Cement Industry Corporation

VIRAC VIRAC Joint Stock Company

VNCA Vietnam National Cement Association

4

Vietnam cement market continues to have

excess supply

The perspective of cement demand can vary

significantly based on the development of

infrastructure projects and real estate cycles.

Cement quality is determined by two main

factors: limestone materials and technology,

equipment.

Logistic is still the weak point of the cement

companies in Vietnam.

Summary

Content is intentionally removed for demo purpose

5

Summary

Three groups of cement suppliers in Vietnam:

Sales strategy:

Cement prices in the country are stable over

the years, the lowest in the North, and the

highest in the South

Production expenses:

Because of the competition within the industry

with large cement companies joining the

market, small cement firms are forced into

bankruptcy or merger because they are not

competitive enough.


6

1. Business environment

1.1 Macroeconomic situation

1.2 Legal framework

Content

7

Sources: VIRAC, GSO

Sources: VIRAC, GSO

Gross domestic product in 2017 is estimated to increase by 6.81% compared to

2016,

GDP per capita has increased strongly over the past few years.GDP by current price and GDP per capita, 2013-2017

GDP growth rate by quarter, 2015-2017





1.1. Macroeconomic situation

8

Source: VIRAC, SBV

Source: VIRAC, GSO

%

Industrial production index of the manufacturing, 2012 - 2017

VND/USD exchange rate, 2013-2017


In 2017, the VND / USD exchange rate was quite stable around

VND 22,400.

9

.

Source: VIRAC, GSO

Source: VIRAC, GSO

VND trillion

VND trillion



State revenues, 2017

Government expenditures, 2017

State revenues and expenditures


Sources: VIRAC, GSO

11

The investment capital for society development by current

prices for economic sectors, 2010 – 2016e

The rate of development of social investment capital increasing

at current prices, 2013-2017




11

Sources: VIRAC, FIA

Sources: VIRAC, FIA

FDI attraction by sector, 2017

FDI capital, 2015-2017Billion USD

Foreign direct investment




12



1.2 Legal framework

Content


1.2 Legal framework - Group of general regulations

13

Decision No.1488/QD-TTg established stricter conditions for new entrants by establishing different technical requirements:

Regulations on WHRPG (according to Decision No.1488/QĐ-TTg):



1.2 Legal framework - Group of general regulations

14

Advantages Disadvantages

WHRPG system:

WHRPG Funds:


15

Decree No. 177/2013 / ND-CP


1.2 Legal framework - Group of price regulations




16

Tax policy:




17



1.2 Legal framework - Group of environmental and resources regulations

No Parameter

Concentration C (mg/m³)

A B1 B2

Type of resourceTaxation

(%)

Applicable tax

rate (%)

Taxable

Items

Unit Tax rate raised by

National Assembly

(VND/unit)

Tax rate raised

by the Standing

Committee

Environmental Protection Tax (EPT)

Natural Resources Tax (NRT)

Environmental Protection Tax applied since 1/2012

Natural Resources Tax applied since 2/1/2014

18


However, the tax rate on the resources has been reacted strongly by the business

19


1.2 Legal framework - Group of environmental and resources regulations



1.2 Legal framework - Group of Export Tax Regulations

The Ministry of Finance issued Decree No.122/2016/ND/CP dated 1 September 2016

Materials:

Clinker and cement:

No Item Export tax rate (%) Import tax rate (%)

Decree No.122/2016/ND/CP

Import and Export Tariffs applied since 2016

20


21

2. Industry overview

2.1 World cement industry

2.2 Vietnam cement industry

2.3 SWOT analysis

2.4 Industry planning

2.5 Outlook and forecast

Content


2.1 World cement industry – 2.1.1 Production

22

Source: VIRAC, Statista

Cement production in Asia is leading the world,

Cement production by region 2015e

Global Cement Production, 2011 – 2076e


Million tons

China is currently the largest cement producer in the world,

No CountryProduction volume

(million tons)

23

Cement production output of some countries, 2017

Sources: VIRAC, Statista

Sources: VIRAC, Statista

Top largest cement producing countries, 2017e


2.1 World cement industry – 2.1.1 Production



2.1 World cement industry – 2.1.2 Consumption

Source: VIRAC, Global Cement

24

Source: VIRAC, International Cement Review

Global Cement Consumption, 2010 – 2018e

Consumption structure of cement worldwide, 2016


Million tons

25




2.3 SWOT analysis



Content


2.2 Vietnam cement industry – 2.2.1 History of Vietnam cement industry

Cement industry is one of the earliest established industries in

Vietnam (along with coal, textile, railway ...)

26



2.2 Vietnam cement industry – 2.2.2 Definition and Classification

27

Definition:

Clinker

Cement

Classification

Vietnam commonly used standards on cement today:


28


2.2 Vietnam cement industry – 2.2.3 Basic production process



2.2 Vietnam cement industry – 2.2.3 Basic production process

29



2.2 Vietnam cement industry – 2.2.4 Scale and market share

Source: VIRAC, GSO

30

Manufacturing enterprises allocation by region, 2016e

Chain allocation by area, 2016



2.2 Vietnam cement industry – 2.2.4 Scale and market share

There are three main groups of cement suppliers in Vietnam:

Source: VIRAC, VNCA

31

Consumption market share of key enterprises, 2017e



2.2 Vietnam cement industry – 2.2.5 Supply-Demand

32

Source: VIRAC, VNCA

million tons

* Supply = total output of cement production; Demand = domestic cement consumption + export output of cement, clinker

Cement supply - demand, 2011 - 2017e



2.2 Vietnam cement industry – 2.2.6 Cement and clinker export

33

World’s top 6 largest cement exporting countries 2016e

million tons

Source: VIRAC, VNCA, Uncomtrade


34

million tons

Source: VIRAC, VNCA

Cement clinker exports, 2010 - 2017e




35

The situation of cement export in the upcoming time is forecasted to be more difficult as China's excess cement production and export prices are low,

thus creating fierce competition for Vietnamese export cement.

Thousand tons

Source: VIRAC, GDVC

Cement clinker exports, 1/2015 - 12/2017e




36

Source: VIRAC, GDVC

In 2017, the main export markets for cement and clinker are Bangladesh and the Philippines.

million tons

Export markets for cement and clinker, 2015 - 2017e




The cement exporters of Vietnam are divided into 2 types:

Cement manufacturers:

Trading company :

Capacity of cement manufacturers for export in 2016

Source: VIRAC, VNCA

37

million

tons/year




In 2017, for the export of cement directly, Vicem Ha Long, Nghi Son and

Thang Long are the three largest exporting enterprises,

Sourcces: VIRAC, VNCA

38

Sources: VIRAC, VNCA

The enterprises export cement directly

, 2017

Exporters of clinker directly, 2017




2.2 Vietnam cement industry – 2.2.7 Price movement

Cement price in Vietnam is much lower than that of other countries in the region and the world average price.

Source: VIRAC, ICR

39

USD/ton Cement price, 2016


Generally in 2017, cement prices are stable compared to 2016 because the price of raw materials and inputs, production costs are stable so the cement

manufacturing factories hold cement price stably.

40

Source: VIRAC, Department of Price

Management

VND thousand/ton

Cement price, 2016

Sale price of cement at some cement companies, 2017

VND thousand/ton

Source: VIRAC, Department of Price

Management

Retail price of cement in the areas, 2017




Export priceSource: VIRAC, Department of

Price Management

41

USD/tonExport price of cement and clinker, 6/2015 - 12/2017




42




2.3 SWOT analysis



Content

Advantage:

Limitation:


2.3 SWOT analysis

43


Opportunities:

Challenges:


2.3 SWOT analysis

44


45




2.3 SWOT analysis



Content


2.4 Industry planning – 2.4.1 Cement industry planning

Decision No. 1488/QD-TTg of the Prime Minister approving the planning on development of Vietnam cement industry.

46


Year Cement demand

(million tons)


2.4 Industry planning – 2.4.1 Cement industry planning

47


48




2.3 SWOT analysis



Content


2.5 Outlook and forecast – 2.5.1 Driving forces of industry development

49



2.5 Outlook and forecast – 2.5.2 Driving forces of output industry development

50

Population growth, 2011 – 2017e

Forecast for value of construction and infrastructure,

2010 – 2022f

Source: VIRAC

Source: VIRAC, GSO


Content

3. Enterprise analysis

3.1 Profitability

3.2 Performance efficiency

3.3 Financial strength

3.4 Return on investment

51


3.1 Typical enterprises in 2015

Name of enterprise Classification Address

Charter

capital

(VND

million)

Revenue in 2016

(VND million)

1 Ha Tien 1 Cement Joint Stock Company

2 The Vissai Cement Corporation

3 Nghi Son Cement Company

4 VICEM Hoang Thach Cement Company Limited

5 Bim Son Cement Joint Stock Company

6 VICEM But Son Cement Joint Stock Company

7 Thang Long Cement Joint Stock Company

8VICEM Hoang Mai Cement Joint Stock

Company

9Quang Ninh Cement and Construction Joint

Stock Company

10 Sai Son Cement Joint Stock Company

Top 10 cement enterprises with the highest revenue in 2016

Source: VIRAC

52



Ha Tien 1 Cement Joint Stock Company

53




The Vissai Cement Corporation

54

The Vissai Cement Corporation



Nghi Son Cement Company

55

Nghi Son Cement Company



VICEM Hoang Thach Cement Company Limited

56

VICEM Hoang Thach Cement Company Limited



Bim Son Cement Joint Stock Company

57

Bim Son Cement Joint Stock Company



VICEM But Son Cement Joint Stock Company

58

VICEM But Son Cement Joint Stock Company



Thang Long Cement Joint Stock Company

59

Thang Long Cement Joint Stock Company



VICEM Hoang Mai Cement Joint Stock Company

60

VICEM Hoang Mai Cement Joint Stock Company



Quang Ninh Cement and Construction Joint Stock Company

61

Quang Ninh Cement and Construction Joint Stock Company




62

Sai Son Cement Joint Stock Company


Content


3.1 Profitability




63


3.1. Profitability

64

Source: VIRAC

VND million Net revenue growth, 2015 - 2016



3.1. Profitability

65

Source: VIRAC

VND millionGross profit growth, 2015 - 2016


Content


3.1 Profitability




66



Source: VIRAC

67

Source: VIRAC

Unit: times Unit: times

Fixed asset turnover, 2015 - 2016Total asset turnover, 2015 - 2016




68

Source: VIRAC

Unit: timesInventory turnover, 2015 - 2016


Content


3.1 Profitability




69


3.3. Financial strength

70

Source: VIRAC

Payment ratio, 2015 - 2016



3.3. Financial strength

71

Source: VIRAC

Solvency, 2015 - 2016


Content


3.1 Profitability




72



73

Source: VIRAC

%Profit ratio, 2015 - 2016


REPORT DISCLAIMER

Report disclaimer

This document has been prepared in good faith on the basis of information available at the date of publication without any

independent verification. VIRAC has produced this report for private circulation to professional clients only. All information and

statistical data herein have been obtained from sources we believe to be reliable and made to ensure the accuracy of the contents of

the pages of the report at the time of preparation. Such information has not been independently verified and VIRAC makes no

representation or warranty, whether express or implied, of any kind with respect to the document and its contents, information and

materials. The content found in this report is proprietary to VIRAC and is provided solely for your personal and non-commercial use.

You agree that you will not use this report for any purpose that is unlawful and that you will not reproduce the report or redistribute it

outside your organization, or place it on a website for public access without the express written permission of VIRAC.

SHOULD YOU NEED ANY ASSISTANCE, PLEASE CONTACT US:

VIETNAM INDUSTRY RESEARCH AND CONSULTANCY (VIRAC JSC.,)

6Mh Floor, Anh Minh Building, 36 Hoang Cau, O Cho Dua, Dong Da, Hanoi, Vietnam

Website: http://virac.com.vn/

Email: [email protected] | Tel: +84 463289520

http://virac.com.vn/mailto:[email protected]

Thank you !

75

Documents

VIETNAM CEMENT INDUSTRY REPORT Q1/2018 · 2018. 5. 4. · 2.3 SWOT analysis 42 2.4 Cement industry planning 45 2.5 Outlook and forecast 48 2.5.1 Driving forces of industry development