(Source: Securities Investment newspaper) In 2013, the general index of all enterprises in the petroleum industry in PVN-Index Family, PVN Allshares, has increased more than double the growth rate of PVN-Index from the beginning of 2014 until now. The Securities Investment newspaper has discussed with Ms. Nguyen Thi Hien, Vice Chairwoman of Petrovietnam Fertilizer and Chemicals Corporation (PVFCCo, stock code DPM), on PVN-Index family as well as PVFCCo’s operation prospects, especially when TPP Agreement is concluded.
Shares of petroleum enterprises have attracted interests of many investors, PVN-Index Family has recorded much stronger growth rate than VN Index. How do you evaluate the first-year operation results of PVN-Index for petroleum enterprises on the stock market in general and DPM in particular?
We realize that this index has reflected the relative overall picture of the petroleum industry and DPM. In 2013, PVN Allshares – the general index of all companies in the Index family has increased by 51.63% and more than double the growth rate of VN-Index. These results are mainly contributed by business results of petroleum companies achieving impressive growth rate in 2013, with profit up by 23% over the same period of 2012. In addition, the market has shown positive signals, and companies in PVN-Index have attracted the investment cash flow of domestic and foreign investors.
As a large corporation in the petroleum industry, DPM is selected for inclusion in the benchmark indexes and investable index (PVN10, including 10 stocks in the petroleum industry with high capitalization value and maximum liquidity) in the Index family. These indexes with high growth rate of points have a positive impact on the market capitalization value of listed companies, also providing investors with multidirectional information about the petroleum stocks.
How do you expect about the values yielded to DPM by this Index family in the future?
In 2013, the impressive growth of PVN 10 Total Return investable index (tradable index) by 48.24% and its high liquidity were good signals for PetroVietnam Securities Incorporated (PSI) and PetroVietnam Finance Fund Management Incorporation (PVFC Capital) to build the investment fund by PVN10 ETF index, expected to be in operation this year. We appreciate the fact that PSI and PVFC Capital have actively proceeded with the index investment fund with this PVN10 Total Return Index.
With stable index operation and preparation of the index investment fund in this year, PVN-Index activities will significantly contribute to the growth of capitalization value, market liquidity, as well as providing comprehensive, precise, and timely information to investors interested in companies in the petroleum industry in particular and DPM in general.
As DPM is a large corporation, fluctuations of its stock price have certain impacts on PVN-Index. As a result, the investors have keen interests in PVFCCo’s operation prospects, also prospects of the fertilizer market. Could you please share your opinions about the fertilizer market in the medium term?
Currently, according to the statistics, the total area of agricultural land in Vietnam reaches over 11 million hectares. Expectedly, the yearly average growth rate will reach 3.5-4% in the next 5 years. In addition, the current trend of agricultural development in Vietnam focuses on product quality improvement and production modernization. These are the basis to promote the development of the agricultural supplies industry in general and the fertilizer production industry in particular. Expectedly, the annual demand for fertilizer increases by an average of 3%/year, in which, NPK achieves highest growth rate, up to 7%/year.
Could you please tell us about forecast on the fertilizer market and PVFCCo’s prospects in production and business in 2014?
This year’s market is expected to continue facing many challenges. The world economy might not be recovered soon, causing adverse impacts upon the fertilizer industry. According to the forecasts of many reputable organizations, the average price will keep remaining as low as that in the second half of 2013.
To cope with these adverse changes of the market, DPM has strengthened its current extensive distribution system including: 4 regional companies, 2 branches, 1 representative office, and 124 level 1 outlets, ensuring smooth communication channels, flexibly responding to fluctuations in price and supply. Besides, PVFCCo will take measures to diversify its products and promote the consumption of other fertilizer products with Phu My brand such as NPK, Kali, DAP,... aimed at even more customers.
The market is much interested inTrans-Pacific Strategic Economic Partnership Agreement (TPP). Could you please tell us about impacts on Vietnam’s agricultural industry and fertilizer producers and traders when Vietnam signs the TPP agreement?
TPP Agreement is a good opportunity for Vietnam to intensively and extensively integrate into the regional and world economy. For agriculture, TPP brings both positive and negative impacts. Specifically, Vietnam agricultural products have opportunities to penetrate into foreign markets when tariff and non-tariff barriers of countries are gradually removed. At the same time, Vietnam’s enterprises can approach to new manufacturing technologies, improving the competitive capacity, and proceeding to the agricultural sector modernization. However, upon integration, especially agricultural integration, which is a double-edged sword, Vietnam must open its market, or remove 100% of all tariff lines (import tax) for agricultural products while having no or loose technical barriers, resulting in challenges associated with opportunities for the domestic market.
In the production aspect, some TPP commitments in areas appearing unrelated but if without drastic effort in negotiation, will also directly affect the production and prospects of agricultural products. For instance, in the draft Chapter on Labor, if the provisions on blocking and mandatory return of all export products made by child labor at borders are not negotiated and removed, the craft villages with products made by households, with the participation of Vietnam’s rural children, will be the first sufferers.
Currently, the contents of TPP Agreement have not been finalized and the signing date is not in sight. However, the impacts of TPP Agreement can be realized, the agriculture and cultivation can have further opportunities. Agricultural products such as coffee, cashew, pepper, rice, and tea keep maintaining their foothold in the markets of U.S., Australia, Mehico, Japan, etc. However, the livestock sector with products of meat, milk,… will encounter more fierce competition. The agricultural supplies, equipment, and techniques market will also be affected. For the fertilizer industry, the import and export tax rate of 0% brings equal opportunities and challenges, creating opportunities for export and competition on home turf as well. As a leading enterprise in the fertilizer industry, with many years of experience, prestigious brand, extensive network, diversified products, and high quality, DPM is confident to take opportunities and overcome challenges.