Business sectors

 

SECURITIES SERVICES

 

2016 HIGHLIGHTS

  • SSI continued to reaffirm the No. 1 brokerage position on both Ho Chi Minh City Securities Exchange (HOSE) and Hanoi Securities Exchange (HNX) with 2016 market share at SSI’s market share in the former reached 13.69%, up 4.7% compared to 2015; and 11.03%, up 15.3% compared to 2015 in the latter.
  • The number of new retail accounts rose by 98% compared to 2015, totaling over 100,000 accounts at the end of 2016.
  • Retail Brokers continued to grow in both quantity and quality. In 2016, SSI had 353 full-time brokers working at 10 branches and transaction offices nationwide, an increase of nearly 30% compared to 2015.
  • Margin lending services also experienced a significant growth with 2016 average margin balance of over VND 3,890 billion, maintaining the highest level in the market and with updated and appropriate margin stocks list. 
  • Products from Institutional Research and Investment Advisory are introduced to a great number of domestic and foreign investors, receiving a lot of positive feedback in the context of Vietnamese market likely to be upgraded to the MSCI Emerging Market.
  • Direct Market Access (DMA) Services were successfully introduced, providing direct order placement tools for Institutional Customers. Moreover, in the past year, SSI has successfully organized hundreds of corporate access events to obtain the understanding of companies, exchanging information and introducing investment opportunities to foreign and foreign institutions, and has been awarded “Best for events and/or conferences in Vietnam” by Asiamoney.
  • SSI Securities Services continued to receive a great number of prestigious awards from regional reputable institutions such as: “Best Broker in Vietnam” by Finance Asia, “Best Local Brokerage” by Asiamoney, and several awards for excellent individuals from Research and Investment Advisory, Institutional Sales and and Institutional Broker Departments.

 

2016 PERFORMANCE

 

In 2016, the market was remarkably impacted by international events such as the fall of crude oil prices, the United Kingdom's withdrawal from the European Union (Brexit) on June 24, and the results of the United States presidential election on November 9. A series of regulations have been issued in Vietnam such as: Circular No. 115/2016/TT-BTC has contributed to enhancing publicity and transparency of companies subject to equitization and protecting the interest of investors; Decision of HOSE on trading units and order types applied on HOSE has provided investors with more utilities, contributing to the market liquidity enhancement. Room expansion was performed on a large scale; State capital divestments from large companies such as Vietnam Dairy Products Joint Stock Company (VNM - HOSE) and listings of companies having the market capitalization of more than USD 1 billion became more positive. The market scale was extended, leading to much more choices for domestic and foreign investors than before, especially more opportunities for foreign investors to invest in their favorite shares of which rooms had been full earlier. Excess liquidity in the banking system caused low interest rates. Easy capital mobilization for securities investments pushed up domestic cash flows, offsetting the overall deficits from foreign cash flows. Revenue from margin lending became a new growth motivation thanks to mobilization of margin lending capital with low interest rates and highly-increased margin needs in the market. Workloads to deal with margin requirements and risk management, therefore, also witnessed a sudden leap. Investors have been more professional so far, diverting more attention to fundamental analysis and needing more information from securities companies. This results in fiercer competition among securities companies in the provision of investment analysis and recommendation reports, services to support investors in meeting companies, financial products to support investors.

In 2016, SSI Securities Services continued to succeed in increasing the number of customers; developing retail customer brokers; growing the brokerage market share; diversifying investment analysis and recommendation reports; expanding margin stocks list and rising margin loan balances; supporting customers by organizing events where investors could meet listed companies and find an investment opportunity. Also, Securities Services received many prestigious awards for brokerage and investment analysis from reputable institutions in the region such as FinanceAsia and Asiamoney. However, institutional customer activities experienced a decline in the face of other securities companies’ competition for market share by reducing fees, and a small number of institutional sales staff led to a lot of limitations on caring existing customers and developing new customers.

 

Market share growth

The brokerage market share continued to reaffirm its highest position in both stock exchanges, reaching 13.22%, up 7.4% compared to 2015, in which the market share on HOSE reached 13.69%, up 4.7% compared to 2015 while that on HNX reached 11.03%, up 15.3% compared to 2015. The market share growth resulted from the extension and development of new customers, increased outstanding balances of financial products, improvement of customer care services, and enhancement of the quality of investment analysis and recommendation reports.

 

 

Revenue growth

2016 revenue from the Securities Services reached more than VND 868 billion, a rise of 42.3% compared to 2015, resulting from a remarkable growth of brokerage fees and revenue from financial products.

 

 

Growth in customers

By late 2016, SSI managed more than 100,000 accounts, accounting for 5.9% of total investor accounts of the whole market, of which 156 accounts were of new foreign institutions mainly from the US, Hong Kong, Singapore and Europe. The impressive growth in the number of customer accounts shows a great concentration on investment advisory services, financial products, as well as the development of well-trained and professional brokers. 

 

Growth in Retail Brokers

 

With the targets of share market growth and scale expansion, SSI continued to implement a large number of programs and policies on recruitment of brokers who were highly qualified and suitable with the working environment and corporate culture of the Company. Not only the increase in quantity, SSI also attached importance to broker training programs so that its brokerage personnel could become financial consultants with high expertise, good professional ethics, consulting capability and customer care skills.

At the end of 2016, SSI had 353 full-time Retail Customer Brokers working at 10 branches and transaction offices nationwide with net average fees of over VND 60 million/person/month.

 

 

Improving the quality of products and services & Developing new products

With endless efforts to improve the quality of products and services, in 2016, the SSI Securities Services successfully deployed new products and increased the utility of existing products, meeting customers’ increasing demands.

 

SSI investment advisory and recommendation products for retail customers were closely aligned with the market with the combination of fundamental and technical analyses to provide appropriate recommendations for customers, enhancing their investment returns and minimizing risks. In 2016, SSI Retail Research and Investment Advisory launched two breakthrough new products, namely Monthly Macro Report “Vietnam Chartbook” and Semi-annual Strategy Report “2016 Stories”.  In addition, reports in Japanese language were developed into a specialized section including 3 types of reports, providing sufficient investment information and recommendations for Japanese customers.

 

Institutional investment advisory and recommendation products have been one of SSI's strengths in recent years and highly appreciated for the trust built with domestic and international customers. SSI has been providing specialized reports for 29 industries and 70 listed companies, accounting for 90% of total market capitalization value.

 

Online trading products have also been improved with more features and utilities for customers such as online securities transfer, which helps customers trade and manage their portfolios more easily, and online order confirmation, which helps customers actively track and manage orders placed on their accounts without signing an order voucher in person.

 

The Institutional Sales, in cooperation with the IT Department, successfully provided Direct Market Access (DMA) services for domestic and foreign institutional customers. Also, Institutional Brokerage launched Good Morning Vietnam products, receiving high appreciation from customers.

 

 

TREASURY

 

2016 HIGHLIGHTS

  • Reached a striking growth in revenue (37.28% higher than 2015) and total assets (up approximately 9% compared to earlier 2016)
  • Absolutely ensured liquidity for customers and effectively supporting high fund demands from other Business Units within the Company, enhancing the image and reputation of SSI as one of the most prestige intermediary financial institutions in the securities market in particular and in the financial market in general.
  • Continued to create safe and effective structured products targeting potential customers.

 

2016 PERFORMANCE

Treasury had an excellent performance in 2016 with increases in total assets by 9%, revenue by over 37.28% and profits by the same percentage compared to 2015. Treasury did not only meet high financial targets but also had remarkable achievements in other activities such as developing products, extending markets, partners and customers, and developing human resources.

 

 

High growth in core business activities

With the target of a strong growth in total assets to ensure the No.1 position in the market compared to competitors, in 2016, SSI had total assets of over VND 13,000 billion, a rise of approximately 9%. This is one of important competitive advances when SSI engages in complicatedly-structured and large-sized transactions.

Although interest rates in the market remained low due to the market supply and demand as well as the State Bank of Vietnam’s orientation towards stable interest rate policies, SSI Treasury continued its growth with a sharp increase in revenue and profits from the monetary trading activities, mainly from long-term deposits.

Besides, in the past year, SSI earned a large profit from the principal trading of Government bonds and Government-guaranteed bonds as it actively seized opportunities from interest rate fluctuations in the market. In addition to the principal trading of Government bonds, corporate bond investment and repo transactions also generated high profits based on appropriate risk levels, contributing to the 2016 highlights.

 

Profits from structured products

Along with the development of the financial market, there was an increasing demand for Derivatives and Structured Products, requiring the products designed appropriately with the characteristics of each group of investors and the market practices. Since 2015, new product investment, research and development have contributed to the effective operations of SSI Treasury in 2016, which was shown not only by a revenue increase but also by the development of new business sectors as well as new customers, creating development momentum for such products next year.

 

Ensuring the highest level of liquidity for the Company and Investors as well

Besides equity trading activities, ensuring the highest level of liquidity of the Company as well as investors, in any circumstances, was a very important mission of SSI Treasury in 2016. In the face of high fund demands from other Business Units, especially those for margin loan balances from the Securities Services, at certain times exceeding VND 4,200 billion, SSI Treasury must ensure demand satisfaction in a timely manner. It was committed to supporting and providing the funds through issue of various debt instruments with interest rates at a record low, enhancing the image and reputation of SSI as one of the most prestige intermediary financial institutions in the securities market in particular and in the financial market.

 

Broadening and strengthening relations with financial institutions in the market

2016 also marked the efforts of the Treasury and Finance Trading Department to strengthen, foster and build sustainable and close business relations with large financial institutions in the market such as: Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), and Vietnam Bank for Agriculture and Rural Development (Agribank) as well as enhance further cooperation with such joint stock commercial banks as: Asia Commercial Joint Stock Bank (ACB), Military Commercial Joint Stock Bank (MBB), Orient Commercial Joint Stock Bank (OCB), Vietnam International Commercial Joint Stock Bank (VIB), and Petrolimex Group Commercial Joint Stock Bank (PGB). Moreover, SSI also broadened relations with other economic organizations such as groups, listed companies with a series of high-potential deals next year.

 

 

 

ASSET MANAGEMENT

 

2016 HIGHLIGHTS

  • Successfully launched SSIAM UCITS - Vietnam Value Income and Growth Fund from European individual and institutional investors. This is a UCITS open-ended fund registered in Luxembourg, and SSIAM is the fund manager.
  • Increasing the size of Andbanc Investments SIF – Vietnam Value and Income Portfolio (incorporated in December 2015) more than 3 times to USD 52.2 million
  • Officially ending the capital mobilizing period for Daiwa – SSIAM Vietnam Growth Fund II LP with total committed capital of USD 39.4 million from investors in Asia. This is a private equity fund managed by Daiwa Corporate Investment and SSIAM.
  • Strong increase in size: Total assets under SSIAM’s management reached VND 7,913 billion, a rise of 27.4% compared to 2015. AUM growth came from both newly mobilized capital and investment returns that SSIAM brought back to its customers.
  • High rates of returns for funds and portfolios under SSIAM’s management.
  • 2016 prestigious awards
  • “Best Fund House” awarded by Asia Asset Management  for the 3rd time;
  • “CEO of the Year” awarded to Ms. Le Thi Le Hang by Asia Asset Management for the 5th successive time.

 

2016 PERFORMANCE

 

Business Environment

Vietnam’s asset management industry witnessed many achievements in 2016. According to the SSC, at the end of 2016, total assets under management of the industry increased by 17% to VND 146,000 billion compared to 2015. By the end of 2016, a new fund was launched, increasing the total number of funds in the marketplace to 30 funds, including 17 open-ended funds with assets size of VND 3,400 billion. Domestic individual investors began to pay more attention to the products of asset management companies. By the end of 2016, total number of investors in open-ended funds was estimated to be more than 10,600, 65% higher than the previous year. This shows positive signs for the market and a motivation for asset management companies to diversify their products and services to better meet the needs of investors in future.

 

Many open-ended funds with impressive returns

Currently, there are 13 open-ended share and balanced funds, and 5 open-ended bond funds operating in the market. Several mutual funds had higher performance in 2016 in the market, building trust with investors in open-ended funds. Particularly, certain funds had rates of return from 16 to 24%, much higher than the VN-Index growth of 15%. The growth of open-ended bond funds was effected by low and less volatile interest rates; however, most funds showed their good performance with rates of return from 7% to 9%.

 

Strong increase in the size of open-ended funds

By the end of 2016, total assets of domestic open-ended funds reached VND 3,400 billion, an increase of 70% compared to 2015. This mainly resulted from the superior performance of many open-ended funds in recent years as well as great efforts of asset management companies in providing information about open-ended funds for investors. In addition, in 2016, many asset management companies actively expanded the open-ended fund certificate distribution channels through the banking system. Thanks to human resources and customers of banks, more and more individual investors were able to access open-ended fund products.

The increase in fund size made a great contribution to busy trading of fund certificates in 2016. According to the Vietnam Securities Depository, by late October 2016,

 

Diversified fund sources with high quality listed stocks

The increase in fund size required fund diversification in the market and listed stocks with high liquidity and large capitalization value. The 2016 securities market saw the listings of many State-owned groups and corporations such as Saigon Beer Alcohol Beverage Joint Stock Corporation (SAB – HOSE), Hanoi Beer Alcohol Beverage Joint Stock Corporation (BHN – HOSE), Vietnam National Textile and Garment Group (VGT – UPCOM), and Airports Corporation of Vietnam (ACV – UPCOM). This resulted from the Government’s great efforts in speeding up the equitization and listings of stocks in the formal exchanges.

 

Legal documents facilitating the development of new products

Several legal documents were issued in 2016, aiming to create legal framework for the development of new products of the asset management industry.

In July 2016, Decree No. 88/2016/ND-CP on voluntary supplemental retirement program was officially issued. This is an attractive product that allows employees to prepare their retirement finance and provides employers with a tool to retain talents. The voluntary supplemental retirement program helps diversify the products of asset management companies.

In terms of derivatives, the Ministry of Finance issued Circular No. 11/2016/TT-BTC guiding Decree No. 42/2015/ND-C on derivatives and derivatives market, and Circular No. 107/2016/TT-BTC on guidelines for the offering and transaction of covered warrants. Such new products are expected to be launched in 2017. The introduction of Future Contracts and Warrants provided asset management companies with more risk-hedging tools for funds and investment portfolios.

 

SSI AM reaffirms its position as a leading Asset Management Company

Capital raising

In 2016, SSIAM continued to successfully raise capital from foreign investors. After introducing Andbanc Investments SIF – Vietnam Value and Income Portfolio in late 2015 with the capital contribution of European institutional investors, SSIAM continued to successfully launch SSIAM UCITS - Vietnam Value Income and Growth Fund from European individual and institutional investors in November 2016. Total assets under management of SIF Fund increased 3 times, from USD 13.9 million in late 2015 to USD 52.2 million in late 2016. SSIAM UCITS Fund reached USD 15 million more than 1 month after its launch date. In the context of severe competition among asset management companies, SSIAM remains a reliable partner of foreign investors in Vietnam’s asset management industry.

In the year, SSIAM continued to strengthen and broaden portfolio management activities on behalf of individual customers with large asset values. In late 2016, total assets under SSIAM’s management reached VND 107 billion, a rise of 78.9% compared to 2015. This business sector is highly potential but challenging.

In order to meet capital raising targets set out, SSIAM exerted their non-stop efforts to improve the quality of entrusted capital management. Procedures for investment, risk management and internal control have been well-run and professional; not only meeting legal requirements but also ensuring the minimization of conflicts of interest that may have negative effects on benefits of investors. With the motto of sustainable development, SSIAM always aims to build trust, transparency and long-term asset value growth for investors.

 

 

Investment activities

In 2016, all of the funds under SSIAM's management achieved superior rates of returns to the VN-Index. Meanwhile, ETF SSIAM HNX30 Fund was closely aligned with the fluctuation of this index.

 

 

 

Andbanc Investments SIF - Vietnam Value And Income Portfolio is a Special Investment Fund registered in Luxembourg and managed by SSIAM in terms of investment portfolios. In 2016, the Fund’s rate of returns (in USD) far exceeded the expected hurdle rate of 10%.

 

 

 

Source: Bloomberg, Adepa. Fund movement, net of all expenses

*Launch date 12/18/2015, **Type C1 (EUR) from the commencement date of 08/01/2016, ***Type D1 (USD) from the commencement date of 07/15/2016; ****Type C1D (EUR) from the commencement date of 11/11/2016

 

SSIAM also yielded high returns on discretionary portfolio management services for institutional customers. Dividend portfolio is the largest institutional customer portfolio with the size of approximately VND 1.287 billion and the 2016 rate of returns of 48.4%.

                                                                                                                       

Private wealth management services catering to high-net-worth individual also gained high returns when the average rate of returns of portfolios reached 30% in 2016.

With the successful launching of multiple new funds and high returns on its operating sectors, SSIAM continued a high growth in total assets under its management. By late 2016, SSI managed more than VND 7,913 billion, 27.4% higher than 2015.

 

Improving the quality of human resources

 

High quality human resources are key to the success of the Company. SSIAM remained its focus on building and improving the human resource recruitment and training policies. Recruitment was conducted publicly and transparently to attract highly qualified and experienced candidates. Each employee was entitled to development opportunities through a policy of financial support for employees participating in training courses and certification exams both domestically and internationally. Also, the Company facilitated employees to attend intensive training sessions from the state authorities or internal training sessions of the Company. With competitive remuneration policies based on competence and contribution of employees, SSIAM followed a target of building a good working environment with a highly connected workforce towards a stable workforce. From the point of view of an open and creative corporate culture, we are always open to ideas from the staff and change in a way that is consistent with the development trend of society.

 

INVESTMENT BANKING

 

2016 HIGHLIGHTS 

  • 2016 revenue from the SSI Investment Banking at its highest level in recent years, reaching VND 106.6 billion, an increase of 145% compared to 2015.
  • Continuing to reaffirm the leading position in the Investment Banking sector in Vietnam with several successful large-scale deals, including advisory service for offering of 78.38 million share of Vietnam Dairy Products Joint Stock Company (VNM – HOSE), valued at VND 11,286 billion, to State Capital Investment Corporation (SCIC); advisory service on the sale of shares of Hau Giang Pharmaceutical Joint Stock Company (DHG – HOSE) to Japan’s Taisho with the transaction value of approximately USD 120 million, and private offering advisory service for No Va Land Investment Group Corporation (NVL – HOSE) under the book building method with the transaction value of over USD 100 million.
  • Receiving the awards “Best Domestic Investment Bank in 2016” and “Best Domestic Equity House in 2016” granted by Finance Asia.

 

2016 PERFORMANCE

The 2016 M&A deals in Vietnam saw a dramatic growth in both quantity and value. According to the Institute for Mergers, Acquisitions & Alliances (IMAA), M&A value in Vietnam reached USD 5.6 billion with 640 deals in 2016, breaking the 2015 record of USD 5.2 billion. Some of the big and outstanding deals of 2016 included the acquisition of 78.38 million Vietnam Dairy Products Joint Stock Company (VNM – HOSE)’s shares worth VND 11,286 billion by Singapore’s Fraser & Neave Ltd (F&N) of Thai billionaire Charoen Sirivadhanabhakdi; Big C Vietnam stake sale to Central Group; Thailand's Singa entering into a strategic partnership agreement with Vietnam’s Masan Group; Vingroup’s Maximark takeover deal; Japan’s Taisho’s strategic partnership with DHG Pharmaceutical Joint Stock Company, etc. If in the past few years, most M&A deals had been advised by international investment banks, in 2016, SSI Investment Banking was engaged in several large-scale M&A deals as an advisor.

Moreover, the 2016 securities market witnessed the stock listings of large companies such as Hanoi Beer Alcohol Beverage Joint Stock Corporation (BHN - HOSE), Saigon Beer Alcohol Beverage Joint Stock Corporation (SAB - HOSE), No Va Land Investment Group Corporation (NVL - HOSE), Vietnam National Petroleum Group (PLX), Airports Corporation of Vietnam (ACV – UPCOM), and Quang Ngai Sugar Joint Stock Company (QNS - UPCOM), which led to a remarkable increase in the capitalization value of the Vietnam securities market and created more investment opportunities, attracting both domestic and foreign capital sources.

 

Revenue from the SSI Investment Banking in 2016 reached VND 106.6 billion, an increase of 145% compared to 2015. This showed the highest revenue level of the SSI Investment Banking in recent years. To achieve such performance, the SSI Investment Banking used its best endeavors to approach customers and offered successful consultancy on several large-scale trade deals in 2016 as follows:

 

Advisory service for offering 78.38 million shares of Vietnam Dairy Products Joint Stock Company (VNM – HOSE) valued at VND 11,286 billion to SCIC. This deal had the highest value in Southeast Asia in 2016 and also illustrated the determination of state-owned capital divestment from the large-scale and highly influential company in the Vietnam securities market. SSI was engaged in the deal as one member of the consultant group, including Morgan Stanley Asia (Singapore) Pte. and VinaCapital Corporate Finance Vietnam, which signed a consulting contract with SCIC.

 

Advisory service on the sale of shares of Hau Giang Pharmaceutical Joint Stock Company (DHG - HOSE) to Japan’s Taisho - a leading pharmaceutical company in Japan - with the transaction value of over USD 100 billion. This was one of the largest M&A deals in Vietnam in 2016 in which 34 sellers were domestic and foreign prestige institutional investors.

 

Private offering advisory service for Nova Land Investment Group Corporation (NVL - HOSE) under the book building method with the successfully mobilized capital of over USD 120 million. This was the first large-scale private offering of shares under the book building method in which about 85% of the purchasers were big and reputable foreign financial institutions from Hong Kong and Singapore.

 

Advisory service on the sale of total shares of PAN Group JSC. (PAN – HOSE) in two subsidiaries that operate in sanitary services to its Japanese strategic partner Nihon Housing Company Limited.

 

Advisory service on controlling rights for large shareholders of Domesco Medical Import-Export Joint-Stock Corporation (DMC – HOSE) with total transaction value of VND 240 billion.

 

Advisory service for issuance and distribution of bond for National Citizen Commercial Joint Stock Bank and Kido Group Corporation (KDC - HOSE), An Duong Thao Dien Real Estate Trade Joint Stock Company (HAR - HOSE), National Phytopharma Joint-Stock Company, and Transimex Joint Stock Company (TMS - HOSE) with total mobilized capital of over VND 2,394 billion.

 

Advisory service for issuance and distribution of bond and certificate of deposit (CD) for several consumer loans companies such as Home Credit Vietnam Finance Company Limited, HD Saigon Finance Company Limited, VPBank Finance Company Limited, and Orient Commercial Joint Stock Bank with total mobilized capital of VND 2,231 billion.

 

 

 

 

PRINCIPAL INVESTMENT

 

2016 HIGHLIGHTS

  • The total investment mounted to VND 4,176 billion in 2016
  • Investment return of active portfolio reached 35.4%
  • Investment return of passive portfolio reached 32.8%

 

2016 BUSINESS RESULTS

 

SSI’s principal investment is managed by SSI Asset Management Ltd. (SSIAM)

SSI Investment approach is value investment. SSI seeks opportunities in sectors benefiting the most from the economy such as Agriculture, Fishery, Logistics, etc. and hold significant position in these companies in order to employ active post-investment management strategy. Accordingly, our team members will join the company’s Board of Directors and/or Board of Supervisors and work closely with the company management to enhance the company’s value towards sustainable development. Investment companies benefit from this while SSI can also create capital appreciation of its investments.

 

SSI’s screening criteria is based on company’s fundamentals combined with attractive valuation of the stock compared to company’s growth potential and environmental, social and corporate governance (ESG) factors. SSI also focuses on mid-cap stocks, as mid-cap companies have more growth potential than large-cap companies.

Having employed this active investment strategy for a number of years, in 2016, SSI decided to exit several investments that met the targeted return. The Company also continued the whole investment cycle by identifying other suitable investment candidates, gradually increasing shareholding in these companies in order to join the company’s Board of Directors and working to enhance the company’s value. As a result, SSI active portfolio returned 35.4% in 2015, outperforming return of market index of 15%.

In passive investment strategy, SSI does not have representation in companies’ BOD but employs a rational asset allocation strategy and increases shareholding ratio in the sectors benefiting from movements of domestic and world economy, including low-priced raw materials (due to falling commodity prices), and sectors benefiting from free trade agreements, etc. Rate of return from these investments reached 32.8% in 2016.

 

 

ASSOCIATED COMPANIES

 

The strategy “Accompanying and Developing with Associated Companies”

By the end of 2016, SSI has 3 associates: These are industry-leading companies which have maintained stable revenue, profit and high dividend payout ratios with highly competitive products. All 3 of SSI’s associates are included in the value chain of Agriculture - Food, Transportation and Warehousing.

 

In 2016, SSI continued to work closely with associated companies to restructure operating cost and enhance operating efficiency. Profit margins in most of these companies were higher than last year’s figures. These companies also focused more in looking for partners to build value chain and enhance company’s value. In particular, one of the 3 associated companies, PAN Group JSC. (PAN - HOSE), has been ranked 6th among the top 50 businesses with the most impressive growth in 2016. 

 

SSI identified Agriculture as the core pillar of Vietnam’s economy so far. Although the share of agriculture in the national economic structure has fallen recently but still contributed 18% of total export turnover in 2016 (equivalent to USD 31.2 billion). Moreover, the total agricultural production value has tripled from USD 11.8 billion in 2006 to USD 38.6 billion in 2016.  SSI believes current economic integration offers tremendous opportunities for Vietnam’s agriculture with labor abundance, experience built over generations, fertile land, and favorable climate in numerous areas. However, like other sectors, Agriculture’s competitiveness also poses certain challenges.


In recent years, Vietnam’s logistics industry has maintained a growth rate of 10% - 15%/ year and contributed 20% to the country’s GDP. Around 1,200 enterprises are currently operating in the sector and Vietnam’s Logistics Performance Index (LPI) has been enhanced thanks to improved legal institutions and efforts of logistics enterprises. However, as reported by the World Bank in 2014, Vietnam’s LPI is relatively low compared to Thailand (35), China (28), Malaysia (25), etc. Domestic enterprises only assume a small market share and focus only on transport services and operating related assets such as port and handling service, customs clearance procedures. This is mainly attributed to the scattered and weak infrastructure facilities and business scale among domestic enterprises. In addition, about 85% of the businesses are still in the early stages of the industry value chain, i.e. mainly operating as the first-party logistics provider (1PL) and second-party logistics provider (2PL) handling export permit, warehousing and charter services. Forth-party logistics providers (4PL) offering supply chain logistics services are still underdeveloped due to incomplete infrastructure and weak demands. Currently, the largest component in the logistics cost structure is freight, which is mainly focused on consumer goods.

 

Over the course of supporting associated companies with cost restructuring, SSI found that logistics is a potential sector and can obtain high growth speed if integrated into the value chain of consumer goods, agriculture, forestry and fisheries. The value chains such as warehousing operations, particularly refrigerated warehouse with highly sophisticated technical specifications and in high demand by businesses operating in the consumer goods, agriculture, forestry and fisheries have somewhat been neglected by domestic logistics enterprises.

 

SSI has been and will continue to seek opportunities in agriculture and logistics sectors in the coming years.