VietNamNet Bridge - Vietnam has the largest cement plant in Southeast Asia as well as many other plants, creating excessive supply. This has led to more merger and acquisition (M&A) deals in recent years.

Being the second largest cement manufacturer in Thailand, Siam City Cement (SCCC) is buying 65 percent of stakes of LafargeHolcim Vietnam in a deal worth 479 million euros ($524 million). 

The deal is expected to wrap up in the fourth quarter after administrative procedures are completed.

Some other Thai groups also eye Vietnamese cement companies. SCG Cement bought Buu Long cement plant in Dong Nai province in 2012. SCG Cement, belonging to SCG, has been developing many projects in Vietnam. 

In 2012, SCG bought 85 percent of stakes of Prime Group Vietnam, the tile manufacturer. It also invests in Tin Thanh, Tien Phong and Binh Minh Plastics and building material manufacturers.

Vietnam has the largest cement plant in Southeast Asia as well as many other plants, creating excessive supply. This has led to more merger and acquisition (M&A) deals in recent years.

In case of LafargeHolcim, analysts said that its owners decided to leave Vietnam because they cannot see bright prospects in the Vietnamese market. 

However, according to SCCC, LafargeHolcim’s revenue in 2015 reached VND5.3 trillion, an increase of 19 percent compared with the year before, while the net profit increased by twofold to VND539 billion.

2015 and 2016 are believed to be the years for Vietnam’s cement industry recovery. 

A report of the Vietnam Cement Corporation (Vicem) shows that the pretax profit of the corporation increased from VND617 billion to VND1.507 trillion in 2014 and VND2.792 trillion in 2015.

With VND25 trillion in turnover, Vicem is one of the three major players in the Vietnamese market. 

Though running the largest plants in Vietnam, foreign players such as LafargeHolcim and other joint ventures could only hold 28 percent of the market in 2014 as reported by StoxPlus.

The strong recovery of the real estate market with many projects resuming could be an important reason behind the development of building material manufacturing. 

Analysts said that the cement M&A market has become busier than ever. 

Vissai has bought Dong Banh, Ha Nam and Do Luong. Xuan Thanh Group has bought Minh Tam and Hoang Long and taken over Sai Son. 

Meanwhile, Ha Long, Song Da and Song Thao have merged with Vicem. Prior to that, Viettel took over Ha Long and Cam Pha plants.

The analysts believe that more M&A deals in the industry will be made in the time to come, mostly because of existing internal problems. 

Excessive supply still exists, but more large-scale projects (with the capacity of 6 million tons a year) are expected to open. 


NCDT