8 slide presentation vinamilk

Company Presentation
November 2016


Important Notice
The information in this presentation has been prepared solely by Vietnam Dairy Product Joint Stock Company (“Vinamilk”) and has not been
independently verified, and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness,
accuracy, completeness or correctness of the information or opinions contained herein or as to the reasonableness of any assumptions herein
or the grounds on which they are based. The information set out herein may be subject to updating, revision, verification and amendment and
such information may change materially. Vinamilk is under no obligation to update or keep current the information contained in this
presentation and any opinions expressed herein are subject to change without notice. None of Vinamilk or any of its advisers or
representatives, or any of their respective affiliates, shall have any liability whatsoever (in negligence or otherwise) for any loss whatsoever
arising in connection with this presentation or any oral information provided in connection herewith.
This presentation is for information purposes only. Nothing in this presentation constitutes an offer to sell or the solicitation of offers or bids to
acquire any securities of Vinamilk. In particular, this presentation is not an offer of securities for sale in the United States and is not for
publication or distribution in the United States (within the meaning of Regulation S under the United States Securities Act of 1933, as
amended).
Attending this presentation in certain jurisdictions may be restricted by law. No action has been taken by Vinamilk or any of its advisors or
representatives that would permit the possession or distribution of this presentation in any jurisdiction where action for that purpose is required.
Persons attending this presentation are required to inform themselves about and to observe any such restrictions.
Certain statements in this presentation constitute "forward-looking statements". These statements, which contain the words "anticipate",
"believe", "intend", "estimate", "expect" and words of similar meaning, reflect Vinamilk’s beliefs and expectations and are subject to risks and
uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing business
or other market conditions and the prospects for growth anticipated by the management of Vinamilk. These and other factors could adversely
affect the outcome and financial effects of the plans and events described herein. As a result, you are cautioned not to place undue reliance
on such forward-looking statements. The management of Vinamilk disclaims any obligation to update its view of such risks and uncertainties
or to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so
under applicable law. Moreover, certain information in this presentation (including expectations and forecasts) relating to the Vietnamese dairy
industry and other industry and economic data has been sourced from third party sources that Vinamilk believes are reliable; however,
Vinamilk, its advisors and representatives and their respective affiliates cannot ensure you that such information third party information has
been prepared on a reasonable basis or is otherwise fair, accurate, complete or correct.

2


Người trình bày

Mai Kieu Lien
Member of BOM
and CEO

Le Thanh Liem
Executive Director - Finance
and Chief Accountant

Le Quang Thanh Truc
Company Secretariat, Director
of Foreign Subsidiaries
Management

Tran Chi Son
Senior Finance
Manager

3


Table of Content

1

Introduction

2

Key Investment Highlights

3

Financial Review

4


Section 1 – Introduction


Vinamilk at a Glance

Extensive Product Offering Across Multiple Categories
Liquid Milk

Yogurt

Condensed Milk

Powdered Milk

Soymilk
Cheese

Ice Cream

Beverages

Net Revenue by Channel

Net Revenue by Region

FY15 (%)

FY15 (%)
Modern Trade &
Others 13%

Overseas
20%

US$

US$

1.8Bn

1.8Bn
General
Trade
87%

Source

Company Filings

Domestic
80%
Source

Company Filings

6


Vinamilk by the Numbers

40-year Heritage of
Dairy in Vietnam

215,000 Points of Sale

Diverse Product Portfolio with
More than 200 SKUs

21% Net Revenue CAGR and
17% Net Income CAGR over

Largest Consumer & Retail
Company in Vietnam

~US$1.8Bn

in FY15

Net Revenue(1)

~US$500MM in FY15 EBITDA(1)(2)
25% Margin

last 5 years
Notes
1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016
2. EBITDA = Net Revenue – COGS – SG&A + Depreciation & Amortization

7


Vietnam – One the Most Attractive Markets in ASEAN

One of the Fastest-Growing Economies Globally

Large and Young Consumer Base of 93MM People
2015 Total Population (MM)

2015-20E Nominal GDP CAGR
9.4

9.4

8.7

Median
Age

7.8

38

27

1,368

1,281

38

28

31

39

47

24

30

322

258

208

144

127

101

93

#4

#5

#9

#10

#12

#14

6.0
4.9

4.5

4.5

World
#1
Ranking

Global Insight

Source

Source

#2

#3

Industry Data

Significant Potential in GDP per Capita

Emerging Middle Class with Rising Income Levels

2015 Real GDP per Capita (US$)

2015 Disposable Income per Capita (US$)
~27x

56,083

2,167
52,888
1,421
776
9,555

8,048

5,813

3,346

2,904

2,070
2010

Source

Industry Data

Source

2015

2020E

Industry Data

8


Section 2 – Key Investment Highlights


Key Investment Highlights

1

Vinamilk – Vietnam’s Domestic Champion with a 40-Year Brand Heritage

2

Strong Leadership Across Diversified Product Categories

3

Extensive Nationwide Distribution Network

4

Vertically Integrated Business Model Supported By Modern Production
Facilities, Innovation Capability and Long-Term Supplier Relationships

5

Highly Visible Growth Trajectory Driven Increasing Volumes, Enhanced
Premiumization and Operational Efficiency

6

Proven Historical Track Record of Financial Performance

7

Highly Experienced Management Team

10


Vinamilk – Vietnam’s Domestic Champion with a
40-Year Brand Heritage

1

Vinamilk’s Brand Heritage

Vinamilk is among the Most Recognized FMCG Brands

•

Pioneered the dairy category in Vietnam in 1976

•

Currently the largest listed company in Vietnam by
market cap

•

Portfolio of well-recognized and trusted brands that
resonate with local consumers

•

Targeting all consumer segments from pre-natal to
the elderly

•

Consistently perceived for delivering quality and value

Pregnant

Mama

0-3
years

2-6
years

Premium Infant
Formula

6-9
years

9-14
years

Kids’ Brand

15-17
years

18-25

years

25-35 +

Youth & Beauty

Vietnam Brand Ranking by Urban CRP(1), 2015 (MM)

70.3

56.4

39.0

50+
years

25.0

Elderly’s Milk

23.6

Common Infant
Formula
Family’s Brand

22.3
Functional Infant
Formula

Source

Notes
1. Urban Consumer Reach Points measures how many urban households a brand is reaching and how often they are being purchased

Kantar World Panel

11


1

Vietnam is One of the Most Attractive
Dairy Markets Globally

Rapid Growth of Consumer Expenditure on Food
and Beverages

Vietnam Dairy Market Valued at US$3.6Bn and Growing
at 8% Per Annum

Consumer Expenditure on F&B per Capita (US$)

Vietnam Dairy Market Size (US$MM)
5,254
844
3,639

555

2,633

285

2010
Source

2015

2020E

2012

Industry Data

Source

2015

2020E

Industry Data

Significant Upside Potential for per Capita Consumption
Dairy Consumption per Capita (kg)
~21x
314

USDA Recommendation: 220
51

US
Source

Malaysia

34

26

22

15

13

Thailand

China

Philippines

Vietnam

Indonesia

Industry Data

12

2

Strong Leadership Position…

Largest Dairy Producer in Vietnam
Market Share by Dairy(1) Retail Value, 2015 (%)

49.0%

Source

Competitors
51.0%
(FrieslandCampina, Abbott, MeadJohnson,
Nestle, Nutrifood, IDP, Moc Chau, TH,
Yakult, Kinh Do, and others)

Industry Data

Notes
1. Includes butter and margarine, cheese, drinking milk products, yoghurt and sour milk products, and other dairy (chilled and shelf stable desserts, chilled snacks, coffee
whiteners, condensed milk, cream, fromage frais and quark)

13


2

…Across Diversified Product Categories

Leadership Across Product Groups With a Portfolio of More Than 200 SKUs
Key Product Groups
Liquid Milk

Infant Formula

Condensed Milk

Spoon Yogurt
Others
15.9%

Others
20.6%
Others
48.2%
51.8%

23.7%

2014

2014

2014
Others
76.3%

2014

84.1%

79.4%

Market
Positioning
Others
47.1%

2015
52.9%

Others
15.7%

Others
20.7%

24.9%

2015

2015
Others
75.1%

2015

79.3%

84.3%

Sample
Products

14


Extensive Nationwide Distribution Network

3

Extensive Coverage Supported by a Vast POS Network

Dominance Across Traditional As Well As Modern Trade

Point of Sales in Vietnam

240,000
Ha Noi

215,000
200,000

161,000

215,000 Retailers
243 Exclusive Distributors
1,609 Supermarkets
575 Convenience Stores

200 Vinamilk Shops

Da Nang

Ho Chi Minh City

Sales Office
Can Tho

Logistics Enterprise(1)
Vinamilk Head Office

Source

Company Filings

Notes
1. Oversee warehouses and transportations of raw materials as well as finished goods

Source

Company Filings

15


4

Vertically Integrated Business Model Supported By
Modern Production Facilities…

Vertically Integrated Infrastructure and Management Systems

Collection of
Raw Milk

13 Production Facilities Across Vietnam

• Chill tankers deliver raw milk at lower than 6oC

Ha Noi

North

Production
Lines

• Manufacturing technologies imported from

• Packaging technologies by Tetrapak,

Packaging

1 Vinamilk Factories

Germany, Italy, and Switzerland
• 100% automation by Tetra PlantMaster

1 Dairy Farm

The only FMCG player
to have facility in
Central Vietnam

Central

Bencopack, and SIG Combibloc

4 Vinamilk Factories

• Spray dry technology by Niro – retains high

6 Dairy Farms

content of nutrients and minerals

South
• ERP technology powered by Oracle manages

Inventory
Management

inventory and minimizes spoilage loss
• Automated shipment within warehouses and

factories by LGV robots

8 Vinamilk Factories
3 Dairy Farms
Healthcare

Clinic

Headquarter

Ho Chi Minh City

16


4

…Innovation Capability…

Overview of Innovation Capabilities
•

•

Qualified R&D team with deep
knowledge of local tastes and
preferences

Strong Track Record of Product Innovation and Successful Products

2015 New Products Launched

Partnership with 3 leading biotech
companies DSM, Lonza, and Chr.
Hansen for research, application and
product development

Optimum Gold
powdered milk

RTD nutrition milk, i.e. Ozé – flavored iced
Dielac Grow, Dielac
juice
Alpha Gold, Dielac
Grow Plus, and
Optimum Gold

Four-Season Twin
Cows ice cream

2016 New Products Launched

Dielac Alpha

Organic Fresh milk
(made in USA)

Drinking yoghurt: Aloe, Spoon yoghurt –
Pomegranate, Orange,
Pomegranate
Strawberry

17


…and Long-term Supplier Relationships

4

Commitment to Increasing Raw Material Self-Reliance and Developing Local Dairy Farm Communities

•

•

Currently has 10 cow-farms producing ~600 tons of
raw milk each day
•

7 GlobalG.A.P-compliant farms

•

2 new large-scale farms under construction
with a total designed capacity of ~24,000 cows

•

1 organic farm – 1st in Vietnam

•

Industrialized farms also serve as technical
support centres for milk cow farmers in the
region

Local farmers and own farms supply raw fresh milk,

currently accounting for ~30% of the total production
demand
•

•

Number of Cows
160,000-180,000

110,000

2015A
Source

Domestic Raw Fresh Milk Supplies
(tons per day)
1,000–1,200

Domestic supply of raw milk expected to reach
40% in the next five years

600

Imports of milk powders accounts for ~70% of the
total production demand. Imports are mainly from
New Zealand, Australia, USA and Europe

2015A
Source

Source

2020E

Company Filings

2020E

Company Filings

Company Filings

18


5

Highly Visible Growth Trajectory

Continue to Drive the Volume Growth Over and
Above the Market Growth
Best-in-class marketing, sales, and R&D
capabilities drive sales growth
Marketing Team
• Analyses consumer preferences and
•

trends
Conduct consumer research with market
research companies

Sales Team
• Understands consumer preferences
through constant contact at various
outlets

Optimize the Product Mix to Drive Premiumization
Targeting the growing upper-middle income
class

Vinamilk Twin Cows
Premium quality milk
manufactured and imported
from New Zealand

Vinamilk Organic
First organic milk in Vietnam,
manufactured in accordance
with international standards

Product R&D Team

Optimum Gold

• Improves product quality and expands

20% increase in DHA derived
from pure microalgae,
combined with Lutein

product portfolio

19


5

Highly Visible Growth Trajectory (Cont’d)

Selectively Expand Overseas Market

Potential export markets in Africa
and especially high-end markets like
Japan, Canada

Continued Improvement in Operational
Efficiency to Drive Margins

Explore Selective Inorganic Growth
Opportunities
Past acquisitions have proven
effective in expanding Vinamilk’s
international operational footprint

Gross Margin (%)

40.6%

36.1%
34.2%

32.8%
Vietnam

32.5%
30.5%

Current Markets

Potential Markets

2010 2011 2012 2013 2014 2015

20


Proven Historical Track Record of Financial
Performance

6

Strong 20%+ Revenue Growth over the L5Y
Net Revenue (US$MM)(1)

708

Growth
Source

972

1,193

1,390

1,576

1,801

2010

2011

2012

2013

2014

2015

48.4%

37.3%

22.8%

16.5%

13.3%

14.3%

Company Filings

Robust Operating Leverage Translating in Consistently Attractive EBITDA Margins
EBITDA Margin (%)
26.1%
25.4%
24.6%
23.1%
22.7%
21.9%

2010
Source

2011

2012

2013

2014

2015

Company Filings

Notes
1. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016

21


7

Highly Experienced Management Team

40

Mrs. Mai Kieu Lien

Mr. Mai Hoai Anh

Chief Executive Officer
and Board Member

Chief Operating Officer
and Executive Director – Sales

•
•
•

•
•

Bachelor/Engineer in Meat and Milk Processing
Certificate of Leningrad Economic Management
Certificate of Government Management

20

Mr. Trinh Quoc Dung

Mrs. Nguyen Thi Thanh Hoa

Executive Director - Dairy Development

Executive Director – Production and R&D

•

•

Engineer of Energy and Automation

11

Bachelor in Milk Processing Technology

33
Mrs. Bui Thi Huong

Mr. Nguyen Quoc Khanh

Executive Director - Human Resources
Administration & PR

Executive Director – Research & Development

•
•

•
•
•

Bachelor in Russian language
Bachelor in Economics

11

Bachelor in Chemical Technique and Foods
Bachelor in Business Administration
Bachelor in English

28
Mr. Le Thanh Liem

Mrs. Ngo Thi Thu Trang

Acting Executive Director - Finance
anh Chief Accountant

Executive Director – Project

•

22

Bachelor in Economics
MBA

•

Bachelor in Economics, major in Enterprise Financial
Accounting
Master of International Commerce and Finance

•
•

Bachelor in Finance - Accounting
MBA

31

Mr. Phan Minh Tien

Mr. Tran Minh Van

Executive Director - Marketing

Executive Director - Production

•

•
•

•
•

Bachelor in Business Management Institute

2
Years of Experience with Vinamilk

35

Bachelor in Engineering
Bachelor in Business Administration
Bachelor of Law with major in commercial laws
MBA

22


Section 3 – Financial Review


Robust Sales Growth through the Cycle

Attractive Sales Growth with Strength in Volumes
Net Revenue(1) (US$MM)(2)

CAGR
1,801
1,576
1,390

1,193

708
74
633

972
125

847

356

36.7%

17.9%

255

198

167

1,026

1,192

1,320

1,445

2010

2011

2012

2013

2014

2015

11%

13%

14%

14%

16%

20%

% Domestic 89%

87%

86%

86%

84%

80%

% Export

Domestic
Source

Export

Company Filings

Notes
1. Net Revenue = Total Revenue – Revenue Deductions (Sale Discounts, Sale Returns, Sales Allowances)
2. Exchange rate of VND22,260 per US$1.00 as of 14 October 2016

24


Strong Operating
Leverage
Driving Superior
Margins
Strong
Operating
Leverage

Driving
Superior Margins

Robust EBITDA Margin Consistently above 20%
EBITDA(1) Margin (%)

26.1%
25.4%
24.6%

23.1%
22.7%
21.9%

2010
Source

2011

2012

2013

2014

2015

Company Filings

Notes

1. EBITDA = Net Revenue – COGS – SG&A + Depreciation & Amortization

25