Having achieved impressive results in 2012, Kinh Do JSC (HOSE: KDC) set even more ambitious targets in 2013 with the launch of new products and continued focus on key products, while simultaneously conducting merger and acquisition in the existing industry with the goal of enhancing Kinh Do’s position in Vietnam’s food market.
Mr. Tran Le Nguyen, Vice-Chairman of the Board and CEO, disclosed that in the implementation of Stage 3, “Profitability Through Efficiency”, Kinh Do has concentrated resources on the company’s core business in the food sector and continued to invest in developing the company’s distribution system and supply chains in order to improve performance and boost profitability.
In 2013, KDC aims to increase both revenue and profit.
Amid the difficult economic environment in 2012, KDC pursued the strategy of reinforcing internal strength, improving operational efficiency and profitability with focus on optimizing supply chains, restructuring investments portfolio and cash flow management, and continuing to invest in to the market consumer.
In particular, the shift in operational approach towards the market, always closely following its trends to respond to and take advantage of each minuscule opportunity, has helped to facilitate the flow of products into the market.
As of end of 2012, Kinh Do hold cash and cash equivalents position, at nearly VND 830 billion. Net operating cash flow increased by more than VND 650 billion. Net revenue of Kinh Do in 2012 was quite impressive at nearly VND 4,300 billion. Meanwhile, by reducing cost of goods sold, gross profit rocketed to approximately VND 1,900 billion. Profit margin was always kept at a high level, over 43%.
With the aforementioned actions, Kinh Do’s pre-tax earnings in 2012 reached VND 490 billion, growing by over 40% from the previous year. Net income increased by nearly 30% to VND 354 billion.
To continue its successful streak, Kinh Do has been transitioning to Stage 4, “Profitable Growth”, from 2013. This is considered to be an important year for Kinh Do with the target of investing in building operational system and foundation for the “Food and Flavor” strategy. Pursuing this strategy, the company has effectively utilized and focused on food products, its main business segment.
According to Mr. Tran Le Nguyen, Vice-chairman of the Board and CEO, in 2013, Kinh Do will concentrate on developing key products and investing in brands. Additionally, the company plans to launch several new products, aiming to serve the essential everyday needs of the consumer, such as instant noodles, seasoning, and cooking oil, to fully utilize the distribution system.
The company expects to reach VND 5,200 billion in revenue in 2013 and VND 600 billion in profit before tax, a 22.5% hike from the previous year. Gross profit margin is forecasted to be over 44% and earning per share is VND 2,774. Particularly, a significant portion of revenue and profit will come from new products that the company will launch in the near future.
KDC’s proposed plan seems fairly feasible in retrospect of previous years’ series of operation. KDC has upheld sustainable growth, with evidence of setting multiple records in revenue from 2009 to date. From VND 1,529 billion in 2009, KDC has now reached VND 4,286 in net earnings (2012) and is expected to exceed VND 5,000 billion in 2013. Gross profit has almost quadrupled over three years (2009-2012) from VND 500 billion to VND 1,869 billion and is expected to reach VND 2,290 billion in 2013.
Unit: Bilion VND
In the mergers and acquisitions side (M&A), in addition to the merging of Vinabico and collaborating with strategic partner Glico, Kinh Do is seeking other domestic and foreign partners to team up with, in terms of business, import, and product distribution, where the company will consider a capital contribution ratio of 30-51% and participate in management and administration in the joint ventures.
Overall, Kinh Do’s strategies in 2013 include focusing on strengthening core operations and launching several new products, as well as planning for major M&A transactions that can increase market share and enhance Kinh Do’s position in the industry.
Noting the happenings of KDC trading in the stock market from August 2012 to date, the price of KDC has gone up by 28% and closing price on April 15, 2013 was at VND 48,600 per share.
| In the 20-year journey from the date of establishment (1993-2013), KDC has left several important imprints with a series of new products constantly being launched from cookies, snacks, crackers, moon cakes, rice crackers, sponge cakes, to Wel Yo yogurt and Wel Grow milk, etc. Most importantly, KDC‘s many merger and acquisition activities have reinforced and helped develop the company’s range of products and product category expansion. KDC successfully affirmed its mark via the acquisition of Wall ice-cream factory, the founding of Ki Do Company in 2003, acquiring the majority stake in Vinabico in 2008, and the completed merger with this unit in April 2013. Aside from these accomplishments, the turning point of consolidating NKD (North region Kinh Do) and Kidos into KDC in 2010 has given KDC the scale competitive advantage which help to improve efficiency in many aspects. |
Vietstock