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VIETNAM ENGINE AND AGRICULTURAL MACHINERY CORPORATION

VIETNAM ENGINE AND AGRICULTURAL MACHINERY CORPORATION


Project Description

OVERVIEW

Vietnam Engine and Agricultural Machinery Corporation (VEA), formerly known as  Engine and Agricultural Machinery Corporation, was established on 12 May 1990. VEA’s core business is manufacturing and trading dynamics equipment, agricultural machinery, tractors, cars, motorcycles, vehicles and waterway transportation and other mechanical equipment.  With the current capacity, VEA can manufacture 70,000 of motors, tractors, agricultural machineries, 3,000 trucks and 50 million spare parts and auxiliaries per year. The corporation’s products are not only consumed in domestic market but also exported to numbers of foreign such as Sri Lanka, Myanmar, the Philippines, Indonesia. In addition, the Corporation is the partner of joint ventures in Vietnam such as Toyota Vietnam Company (TMV), Vietnam Suzuki Corporation (Visuco), Japan-Vietnam Engineering Company (J.V.E) and Ford Vietnam Ltd. VEA has been traded on the UPCOM market since July 2018.

MAIN BUSINESS

  • Researching and manufacturing engines, agricultural machinery, equipment and technologies;
  • Manufacturing and trading spare parts and auxiliaries;
  • Manufacturing and trading trucks;
  • Mining metallic ores;
  • Financial Investment;
  • Trading real estate, and commercial services;

MARKET POSITION

  • With the current capacity, VEA has its capacity to manufacture 70,000 of engines, tractors, agricultural machineries,  3,000 trucks and 50 million spare parts and auxiliaries per year.
  • Engine and agricultural machineries: Among domestic industrial manufacturers of engine and agricultural machineries with the localization rate of over 60%, VEA is the leading firm in engine and agricultural machinery of Vietnam. However, in the whole market, domestic firms occupy approximately 30% of Vietnam’s market shares, in which VEA’s market share is only 15%-25%.
  • Automobile industry: In 2014, VEA accounts for 1.8% of the market share in Vietnam truck manufacturing and assembling industry.
  • Support Industry: VEA is a main spare part provider for big joint ventures in Vietnam such as Honda, Yamaha, Piaggio…The cooperation with reputable companies enables VEA to not only have stable supply sources but also enhance its management capacity and trademark development. Some foreign customers have also ordered for VEA’s product such as Sumitomo, Toshiba, Konishi.

GROWTH STRATEGY

  • Focusing on 3 main business lines that VEA has high growth potential and competition strength, including manufacturing movers, engines and agricultural machines, manufacturing trucks and components for automobiles and motorbikes, and manufacturing supporting products;
  • Agricultural machinery manufacturing: Researching and developing agricultural machineries to diversify modes and improve quality to meet demands of domestic and export markets;
  • Truck manufacturing and consumption: Searching for foreign partners who have needs to expand their business in Vietnam, in order to use the redundancy in capacity of automobile factories. Moreover, this cooperation will enable VEA to apply advanced technologies to improve the localization rate and product quality;
  • Supporting industry: Coordinating internal cooperation activities to promote and take advantage of its members’ strength and to seek for new customers from inbound or outbound markets to enhance the consumption of its products, and to reduce dependence on some big customers in the support industry;

PROSPECTIVES

  • On 12 August 2014, the Prime Minister issued the Decision No.1342/QD-TTg on approving the action plan of developing agricultural machinery industry. Thereby,  the machinization rate will reach 95% in soil preparation, 70% in planting and fertilize stage and 80% in processing stage. Mechanical machinery manufacturing plays an important part in providing means of production in agriculture. With a large proportion of land and labor used for agriculture, there is a need to replacement from hand to machine use. Thus, mechanical machinery manufacturing will have potentials for development.
  • According to Decision No. 1168/QD-TTg dated 16/07/2014 by the Prime Minister, group of trucks, passenger carrying trucks, specialized purpose trucks are the prioritized group for development. Namely, small trucks serve in agriculture, medium-sized passenger carrying trucks are promoted.
  • Because of its important role in the economic development, supporting industry has been received the investment and encouragement from  the Government to enhance supplying capacity for local market towards export and to improve competitiveness to become an international influential provider in supporting products.

RISK

  • Competitive risk: Although VEA has been working in the agriculture machinery and automotive manufacturing industry for ages, the firm’s technology still sees it difficult to catch up with its competitors.
  • Risk from fluctuation in cost of materials: Most of the materials used in VEA’s production depends much on imported goods. As a result, the fluctuation in cost of materials due to the exchange rate, import tax policy and the global economic condition directly affects VEA’s profit.