The ambition to buy back shares in 6 companies is the direction of BAF Vietnam Agricultural Joint Stock Company, aiming to take advantage of the policy of changing the small-scale, household livestock farming model to a professional, large-scale one.
The ambition to buy back shares in 6 companies is the direction of BAF Vietnam Agricultural Joint Stock Company, aiming to take advantage of the policy of changing the small-scale, household livestock farming model to a professional, large-scale one.
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| Regulations on changing small-scale, household livestock farming models to professional, large-scale ones are being taken advantage of by businesses to expand market share. |
Continuously improve the closed chain
At the end of October, BAF Vietnam Agricultural Joint Stock Company (BAF) announced the successful transfer of 95% of its capital contribution at Khuyen Nam Tien High-Tech Livestock Company Limited, for VND47.5 billion (Khuyen Nam Tien Company has a charter capital of VND50 billion). At the same time, BAF also received the transfer of shares from 5 other livestock companies in Quang Tri, including Toan Thang HT Joint Stock Company, Hoang Kim QT Joint Stock Company, Viet Thai HT Joint Stock Company, Hoang Kim HT-QT Joint Stock Company and Thanh Sen HT-QT Joint Stock Company. The amount of shares transferred is 171,500 shares, equivalent to 49% of the charter capital.
The above information was shared by Mr. Ngo Cao Cuong, Chief Financial Officer of BAF at the meeting with investors on November 7. Accordingly, BAF aims to acquire all 6 of these companies. BAF representative said that the 5 companies acquiring 49% of charter capital all have land funds, are completing legal procedures and the company will acquire all of them after completing the procedures.
BAF’s move to acquire the above-mentioned companies is considered a move by this enterprise in response to changes in the Animal Husbandry Law. Specifically, the Animal Husbandry Law strictly prohibits animal husbandry in unauthorized areas of cities, towns, townships, and residential areas. The law stipulates that localities have 5 years from the date the law takes effect to relocate unsuitable animal husbandry facilities (ie from January 1, 2025). According to this law, tens of thousands of small, unqualified animal husbandry facilities will have to close or relocate, causing disruption in the short term. Meanwhile, large companies with closed value chains will benefit from reducing unfair competition and enhancing quality control, while expanding market share.
According to BIDV Securities Company (BSC), the production structure in this industry has shifted towards professional livestock farming (market share increased from 30% to 50-60%). The reason is that the market share of households has decreased due to disease, losses in the period 2018-2024 and modern livestock businesses are leading the trend according to the new regulations of the Law on Animal Husbandry.
BAF and Dabaco Group are considered to be the two names that will benefit greatly. Accordingly, BAF will build and continuously improve a closed value chain to comprehensively control raw materials for animal feed production, breeding animals, high-tech farms, meat production and processing, as well as the distribution network to consumers.
BIDV Securities Company believes that BAF will achieve a profit after tax growth of 17.63% (2024) and 27% (2025) when pig production increases sharply thanks to protecting the herd against the spread of African swine fever and a significant contribution from upgrading new farms to the total herd. Gross profit margin improves from 6.6% (2023) to 16.75% (2024) and is expected to reach 18.21% (2025) thanks to the average pig price remaining around VND60,000/kg, reducing input material prices by 10-20%.
BAF also has a competitive advantage for a long-term position with lower cost of goods sold than other companies in the same industry (10-15%) and accelerates the construction of livestock farms in accordance with legal regulations.
To take advantage of this opportunity, BAF's plan is to expand very quickly and on a large scale. In 2025, BAF plans to spend about 3,000 billion VND to build 15 farms. In case it cannot build in time, BAF will have to rent or find investors, owners with land and capital, they will build according to BAF's model and BAF will rent them back.
According to BAF's CFO, the company cannot build pig farms to meet the number of births, so it must speed up the progress of renting and building farms. If it cannot do so in time, it will have to sell breeding pigs - those that are old enough to mate and give birth, so they will sell breeding pigs to people to optimize costs and profits.
Meanwhile, Dabaco operates in many industries, but its main fields are animal feed production, livestock and poultry breeds, and food processing. In addition, Dabaco also participates in the investment and construction of industrial park and urban area infrastructure and real estate business.
"Shaking hands" with Chinese giants
BAF was established in 2017, is a pig farming, animal feed production and agricultural products trading enterprise in Vietnam. BAF is currently pursuing a development strategy with the 3F standard model (Feed-Farm-Food) - the model "from farm to table". In which, BAF Meat pork is being distributed through the Siba Food clean food store chain and BAF Meat Shop points of sale. By 2030, Siba Food will own the largest food store chain in Vietnam with 1,500 Siba Food stores and 15,000 Meat Shop stores. BAF's board of directors said that it will focus on expanding distribution channels at large supermarkets such as Big C and Aeon, to bring products closer to consumers.
The shareholder group that owns BAF is Tan Long Group through Siba Holdings Joint Stock Company. This is a multi-industry group, with business activities related to the supply, production, and trade of animal feed, rice, seeds, minerals, and high-tech mechanics. In addition, BAF's Board of Directors also holds a strategic position at Tan Long Group. Specifically, Mr. Truong Sy Ba is the Chairman of the Board of Directors of both BAF and Tan Long Group, Ms. Bui Huong Giang holds the position of General Director at BAF and Deputy General Director at Tan Long Group.
BAF currently owns 21 subsidiaries. These subsidiaries were created to own farms and farm clusters. Because BAF has a close relationship with Tan Long Group, it benefits from the group's cheap feed ingredients. About 15-20% of output pigs are distributed through the Siba Food system of Tan Long Group's member company and BAF's major shareholder, Siba Holdings JSC.
In September 2024, BAF expects to comprehensively improve the closed chain system from animal feed factories to the barn model through strategic cooperation with Muyuan Foods Co., Ltd. (China). This move aims to receive the transfer of smart livestock technology equipment, applying artificial intelligence to the operating process throughout the livestock chain to ensure biosafety and environmental friendliness.
According to Mr. Gao Tong, CFO of Muyuan, the Group is confident that it can support BAF in achieving its goal of expanding to 450,000 sows and 10 million pigs by 2030. One of the most important technologies that Muyuan will transfer to BAF is multi-storey barn technology. This is a model that Muyuan has long applied in China. Specifically, a barn has 6 floors, of which the 5th and 6th floors are used to raise sows; the 3rd and 4th floors are for newborn and weaned pigs; the bottom 2 floors are for raising pigs. This scale allows for convenient management, especially biosecurity management.
Mr. Truong Sy Ba, Chairman of the Board of Directors of BAF, said that Muyuan's breeding technology has a strict protection process, optimizing prices and costs, so BAF is completely confident in expanding the scale to 10 million heads. In addition, the land is saved, along with the support of credit institutions and international banks, allowing the company to have strong enough financial resources to achieve this vision.
The 16th Vietnam M&A Forum 2024 - a prestigious annual event on mergers and acquisitions and investment connections organized by Dau Tu Newspaper under the direction and sponsorship of the Ministry of Planning and Investment, will be held at JW Marriott Saigon Hotel (HCMC) on Wednesday, November 27, 2024.
With the theme “Bustling Deals/A Blossoming Market”, the Vietnam M&A Forum 2024 will discuss in depth the emerging M&A opportunities in potential sectors such as real estate, retail, technology, renewable energy, financial services and logistics.
The event will have the following main activities:
Main workshop with leading Vietnamese and international speakers.
Honoring outstanding M&A deals and consultants in the period 2023 - 2024.
Release of Special Edition M&A Market Panorama 2024 (bilingual Vietnamese - English).
Source: https://baodautu.vn/dong-thai-thau-tom-giua-cac-doanh-nghiep-nganh-chan-nuoi-d230074.html
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