Responsible investment activities

 

SSI believes that Environmental, Social and Corporate governance (ESG) factors, in addition to fundamental analysis and stock valuation, constitute one of the principles of investment choice. We notice a business’s growth in the long run and stock value are closely linked to its environmental and social impacts as well as corporate governance quality.

 


SSI applies the ESG standards of the International Finance Corporation (IFC) for its investments, aiming ultimately at sustainable development. Specifically, during our investment process, we spend a lot of time trying to understand a company’s top management and their vision, transparency and corporate governance aspects. Together with the assessment of environmental and social impacts of the company’s business activities, we also take into account other factors like working environment and determine whether it is one that works in the best interests of employees. ESG assessment represents a key factor in SSI’s decision-making process. There were cases where we had to reconsider investment decisions as it was impossible to work with the target company’s management on the ESG criteria.


After an investment decision has been made, SSI continues to work closely with the recipient company to pursue its responsibility of encouraging and advising on the improvement of the ESG factors. Members of SSI’s investment team serve in the BOD and the SB of the investee company to assist them with corporate governance and to promote transparency in decision-making. SSI, in addition, also refers independent BOD members to the recipient company with a view to nurture transparency and reduce conflicts of interest therein.


Specifically, as an investor in agriculture, SSI plays an active role in creating a value chain where the origin of marketed products can be traced. By delivering products to the end-users, SSI minimizes farmers’ concern about market and pricing, thus creating a more sustainable product lifecycle. When working with a company that invested in crop species, by encouraging that company to work more closely with farmers in technology transfer and guaranteed purchase of products, SSI contributed to helping the farmers double their income.


In another case, SSI encouraged the investee company’s management to act with more transparency during its decision-making process. SSI advised the recipient company on the amendment of its charter in order to ward off the risk of a hostile takeover. Assistance was also provided to help the recipient company review its operating expenses and recruit senior executive personnel to run underperforming units, and so on.


Over the years, SSI’s investment strategy of companionship has helped recipient companies improve ESG factors to head for sustainable development. Besides, it has also enabled the Company to realize its goal of sustainable development in investment activities, which are responsible for major contributions to the total income. Revenues from principal investment made up 34.7% of the consolidated earnings in 2017. At the end of this year, SSI had 3 associated companies, all of which are leaders in their respective industries and have high revenues, stable profitability, high dividend rate and competitive products. SSI continued to work with associated companies to restructure their production expenses and improve their efficiency. They also focused more on seeking partners to build value chain and enhance company’s value. Specifically, two of three associated companies achieved double-digit profit growth rate: The PAN Group (PAN – HOSE) – 44%, and Dong Nai Port JSC. (PDN – HOSE) – 23%. Especially, Pan was voted as the 6th position in the list of enterprises with strong growth in 2017. Vietnam Fumigation JSC. (VFG – HOSE) has a slight reduction in profit (5%), but continued to maintain its 2nd position in market share of plant protection drugs.


Brief profile of SSI’s Associated Companies: