SEKISUI CHEMICAL CO., LTD. (President and Representative Director: Teiji Koge; hereinafter, “SEKISUI CHEMICAL”) signed an agreement on July 5, 2017, for capital participation in TIEN PHONG PLASTIC SOUTH JOINT STOCK COMPANY (President: Dang Quoc Dung, hereinafter, TPS), a plastic pipe manufacturer in the Binh Duong Province in the south of the Socialist Republic of Vietnam.
In 2013, SEKISUI CHEMICAL signed a business alliance agreement* with TIEN PHONG PLASTIC JOINT STOCK COMPANY (Chairman: Tran Ba Phuc, hereinafter, TifoPlast) a major shareholder of TPS and the largest plastics manufacturer in Vietnam*, and we have been expanding our business in piping and infrastructure fields in Vietnam.
In addition to the business alliance with TifoPlast which operates mainly in northern Vietnam, through the recent capital participation in TPS which TifoPlast invests in and which operates in the south, we will work to further expand our Vietnamese business and make it a bridgehead for future expansion in other ASEAN regions.
* Refer to SEKISUI CHEMICAL's July 23, 2013 press release：Business Alliance with Major Vietnamese Plastics Manufacturer
1. Background
In SEKISUI CHEMICAL Group's medium-term management plan "SHIFT 2019 -Fusion-" for the fiscal years 2017 to 2019, the Urban Infrastructure & Environmental Products Company (President: Hajime Kubo) positions business expansion in the Asia region, particularly the ASEAN region, as one of its growth strategies. We are working to expand sales of products for water and sewage systems and plants in the piping and infrastructure fields.
In particular, Vietnam continues to maintain stable economic growth, while inward investment by Japanese and other companies is also strong, and we can expect demand for infrastructure development for public and private sectors in the future. Southern Vietnam is geographically located in the center of the ASEAN region, is suitable for marine transport, and has the main highway leading to Thailand via Cambodia, so it has favorable conditions for business development in other ASEAN regions.
In January 2015, we established SEKISUI VIETNAM PIPE SOLUTIONS COMPANY (currently SEKISUI VIETNAM COMPANY) in Hanoi City in northern Vietnam, established an OEM supply system for our products together with TifoPlast, and we have been conducting joint marketing for sales.
2. Aims and details of capital participation
In addition to the business alliance with TifoPlast which operates mainly in northern Vietnam, capital participation in TPS based in southern Vietnam will capture the southern Vietnam market with a large demand for water infrastructure development, and we will work to further expand our Vietnamese business and make it a bridgehead for future expansion in other ASEAN regions. After capital participation, we will undertake the following three measures.
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(1) |
License TPS to use our patents and production know-how and strengthen TPS's product lineup in order to acquire demand in the southern Vietnam market. |
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(2) |
Expand sales of our piping related products for water and sewage systems and plants by utilizing TifoPlast and TPS sales networks. |
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Outsource production of products for other ASEAN regions and Japan by utilizing production bases of TifoPlast and TPS. |
Including these efforts, we aim to increase Urban Infrastructure & Environmental Products Company's sales in Asia (excluding Japan) by 33 billion yen in fiscal 2019 (75% increase from 2016).
Based on this agreement, we plan to acquire newly issued shares of TPS in August 2017. As a result, we will own 25.3% of TPS's outstanding shares.
In addition, we will dispatch one person as a director of TPS from SEKISUI CHEMICAL, and we will provide cooperation for the growth and development of both companies.
3. Summary of TPS
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1) Company name:TIEN PHONG PLASTIC SOUTH JOINT STOCK COMPANY |
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2) Headquarters location: Block C2, Dong An II Industrial Park, Hoa Phu Ward, Thu Dau Mot City, Binh Duong Province |
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3) Established: 2007 |
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4) Representative’s name: DANG QUOC DUNG |
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5) Principal business:Production and sale of plastic products in general |
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6) Capital: Approximately 1 billion yen (38% of which is invested by TifoPlast) |
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7) Number of employees: Approximately 350 (as of the end of December 2016) |
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8) Net sales:Approximately 4.4 billion yen (2016 results) |
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9) Production base:Binh Duong |
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10) Sales base:Ho Chi Minh |
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July 5, the signing ceremony in Ho Chi Minh (from the front President Dung of TPS is on the left, and President Kubo is on the right). |
Disclaimer
This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.