Sweets industry still pulling in investors

After Kinh Do Group sold its sweets manufacturing division to Mondelez and industry growth slowed, some analysts commented that the sweets market was no longer attractive.

However, they may have to rethink the market prospects as Vinataba recently made a fat profit after divesting its 51% stake in Hai Ha and Huu Nghi Confectionary Companies.

The deal has brought hundreds of billions of dong to Vinataba, while Huu Nghi’s and Hai Ha’s shares have been hunted by investors. Bibica and Quang Ngai Sugar Company, the owner of Biscafund sweets brand, have also seen the prices of their shares increasing.

By the end of April, Bibica share price had climbed to VND100,000 per share, 3-4 times higher than Hai Ha and Huu Nghi share prices.

Securities analysts believe that the shares of sweets companies can go for good prices because there are few sweets shares listed on the bourse. 

A representative of Vinataba confirmed that the divestment from Huu Nghi and Hai Ha is a part of the corporation’s plan to withdraw capital from non-core business fields. He denied that Vinataba divested Huu Nghi and Hai Ha shares because of the two companies’ bad business performance.

Phap Luat cited its sources as reporting that Huu Nghi has annual turnover of over VND1 trillion and output of 20,000 tons. Meanwhile, Hai Ha reported a 5-7% growth rate in the first six months of the year.

According to Lam Ngoc Tham, CEO of Topcake, the sweets joint venture had stable growth rate of 15-20%. 

Among soft cake manufacturers, in 2015, Pham Nguyen Food Processing and Confectionary reported turnover of US$30 million (VND682 billion). In 2016, it had turnover of VND739 billion which meant the 15% annual growth rate.

Meanwhile, Orion reported huge revenue of VND4 trillion in 2016, an increase of 24% over the same period of the year before.

Not only high domestic demand, but satisfactory exports are also why investors are pouring money into the sweets industry. 

With its products exported to more than 10 markets, Hai Ha reported export turnover of US$3.2 million in 2016, while the figure is expected to increase to US$3.3 million this year.

Tham of Topcake said the company exports tens of containers of products to Cambodia, Japan, Thailand and Myanmar, and it is planning to export products to the US.

Some domestic sweets manufacturers said that sweets exports maintain two-digit growth rates in some markets such as China, the US, Cambodia, Japan and the Republic of Korea.