VINACHEM

Tire manufacturing industry is also evaluating potential by Vietnam is one of the major rubber producing countries.In particular, the DRC (Da Nang Rubber Joint Stock Company) is one of the leading companies producing tires with outstanding advantage with the structure of main products are car tires and demand domestic market highly.

Shareholder structure of the DRC: Vietnam National Chemical Corporation owns 50% of charter capital, foreign investors 43.0% (Fund FTIF - Templeton Fund 7.8%), other investors7.0%

High Profitability

In 2012, in the condition price of rubber is not big changes, DRC have more chance to save 138 billion VND cost of inputs (raw material, 110 billion VND and the remaining 28 billion in electricity costs, fuel ...), facilitatethe companymay exceedthe profit before taxplan230billion VND andreach about250-280billion VND in2012, the EPS of DRC (earnings per share) will reached 2,700-3,000 VND / share (after the capital increase to 691 billion VND, this is a relatively high level of EPS during the periodthe Company investing).

DRC in 2011 reached 2,637 billion VND in revenue and profit after tax increased by 22% and 1% respectively compared to 2010, EPS remained relatively high at 4,830 VND / share.Revenue growth at 22% but profit after tax grew only 1% due to rising prices of raw materials (rubber prices in 2011 increased 35% compared with 2010), interest expense and losses by exchange differenceincrease causing earning capacity decreased.

However, the profitability of the DRC still higher than the tire company in the industry such as Sao Vang Rubber Joint Stock Company (SRC), The Southern Rubber Joint Stock Company (CASUMINA).Specifically, the gross profit ratio of the DRC (16%) CASUMINA (9%), SRC (9%) in 2011.

Pressure from the loan

The DRC is moving the manufactory from Bac My An to Lien Chieu IZ, expection of investment cost is 673 billion, of which 580 billion VND of new investment.Investment capital is 40% equity capital and support, the rest is borrowed Vietinbank.Time to move from quarter 1/2012 to the end of 2013 to ensure that does not affect the production and business activities.Project truck radial tire production capacity of 600,000 tires / year with total investment 2,993 billions VND (of which 30% own capital, bank loans 70%) with 2 phases from 2010 to 2015.

Phase No.1 of the project was implemented from 2010. In2011, DRC has disbursed 211 billion VND, bringing total disbursements for the project to 263 billion VND.In 2012, DRC expected to accelerate disbursements to 1245 billions to try and run the product in 2013 ...

According expectation, DRC will increase capital from 461 to 691 billion VND to support bank loan lending when deployment projects.DRC is in investment phase should invest huge capital demand.

The challenges of material

Natural rubber is the most important input for the tire industry.Rubber productivity of Vietnam ranked 2^nd in the world, 5^th about output and 4th in quantity export of rubber, DRC and Vietnam enterprises have great advantages in the production of these commodities.However, natural rubber is one of the inputs of the industry.But other materials such as carbon black, synthetic rubber, machinery and production lines ...

Not only DRC, the other enterprises still imported from abroad.There is a paradox in the rubber industry of Vietnam that is, whether a large exporter of rubber in the world but every year, our country still imports rubber from 100,000 to 130,000 tons in service in the tire domestic industry.

Therefore, theprice of rubberanddirectlyinfluencethe business resultsof enterprisesproducingtires.Although,in the top 5 of the countryonexports, butcompared totwoleading countriessuch as Thailand andIndonesia, the outputof theVietnamdistancetoo fartothe rubber industryVietnamwhichdepend onfluctuationsin world prices.

The domestic economy is in trouble has a large effect to the DRC in particular and tire manufacturing industry in general. Auto industry is unmarketable, although many have used promotional tactics but this time not by consumer demand stimulus, the motorcycle domestic market frozen. Economic stagnation accompanied by inflation low, so consumers will gain priority for essential goods instead of buying items such as motorcycles and cars. So in short, the DRC will face many challenges on the market in 2012 ...

From early 2012 until now, the percentage of foreign ownership in the DRC increased by 4% to 22.18%.