Calling on Sharks to invest 20 billion in exchange for 6% of shares
Stating the view that “if you don’t believe in the product you make, don’t even think about selling it to others”, An Thai Hung - an OEM (Original Equipment Manufacturer) business cleverly affirmed the production capacity of his business in Shark Tank season 6.
Founder Le Ngoc Hue.
An Thai Hung is one of the enterprises specializing in manufacturing products of herbal origin, natural.
Founder Le Ngoc Hue said that An Thai Hung has produced about 400 products, belonging to 5 product groups including essential oils; soluble powder; chemicals - cosmetics, family health care products and herbal tea.
Herbal tea is the main product group of An Thai Hung and is currently processed by the company for 85 partners. To meet production needs, this enterprise has invested in building two factories with a total scale of more than 30 thousand square meters.
Revealing the financial picture of the enterprise, Ngoc Hue said that the company's total assets are 128 billion, including 122 billion in equity and 6 billion in loans. The company's revenue in 2021 reached 25 billion, in 2022 it was 46 billion and the target for 2023 is 80 billion in revenue with a net profit of 25%. It is known that 95% of An Thai Hung's revenue comes from the processing sector.
Convincing the Sharks about the company’s strengths, Ngoc Hue said that An Thai Hung had optimized production costs by establishing a process that could create four product lines. In addition, his company also had an advantage in labor costs, “compared to Ninh Giang district of Hai Duong, the difference is about 40%.”
Ngoc Hue affirmed that the company has a very solid foundation as it has “conducted a national-level scientific research project and 3 provincial-level research topics” and has the guidance and advice of a leading expert in the field of medicinal herbs. In addition, the company has developed raw material areas in Thai Binh, Thai Nguyen, and Bac Kan.
The founder is also confident that in the North, “almost no other unit” has a model similar to An Thai Hung because his company has invested in modern technologies such as vacuum extraction, centrifugal drying, freeze-drying system, etc.
Calling on the Sharks to invest 20 billion in exchange for 6% of shares, Ngoc Hue said the investment capital will be used for the purpose of researching and developing products for foreign markets; investing in raw material areas and marketing and communications.
Shark Hung closes deal of 5 billion for 5% of shares
Explaining the reason for investing in communications and marketing while the company's business model is B2B (Business to Business), Ngoc Hue expressed his desire to support partners in marketing because "if I have strong capabilities in marketing communications, I can support those businesses to sell well". His dream is to create a game show (TV game) to spread agricultural products to attract large-scale businesses to cooperate with him in processing.
However, Shark Minh Beta believes that a manufacturing company or OEM partner will hardly have the same "marketing" capacity as the product owners themselves.
In addition, Shark Minh Beta and Shark Hung also agree that you should not produce too many product lines. While Shark Hung commented that "being too rambling will make the investment cost of machinery and equipment and operating capacity ineffective", Shark Minh Beta warned that "when partners look at you, they will think that you are not specialized enough in anything to cooperate".
Respecting the path the startup is taking is exploiting the value of precious Vietnamese medicinal herbs, but because he does not understand this field, Shark Minh refused to invest.
With a taste for investing in businesses that directly own "end users" - those who consume the products, Shark Binh stated the point of view that "owning a factory to produce new products is a necessary condition, but owning customers to consume the new products is a sufficient condition" and refused to invest.
Shark Tue Lam and Shark Hung Anh also left the deal because they had no experience or expertise in investing in this field.
Owning an ancient Shan Tuyet tea brand and aiming to diversify products for mass sale, Shark Hung expressed interest in An Thai Hung.
Realizing that the two sides could become partners but at the same time worried about the conflict of interest when being both a shareholder and a customer, Shark Hung proposed to change the deal structure. Accordingly, he proposed to invest 5 billion for 5% of shares, the remaining 15 billion would be invested in the form of product business cooperation, converted into OEM order costs.
Realizing that the company's ecosystem had many similarities with Shark Hung's corporation, Ngoc Hue quickly accepted this offer.
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