AN PHAT PLASTIC (AAA): 2017 CHAIRMAN'S LETTER

     Dear Shareholders,

     The year is coming to an end, and we would like to give our most sincere thanks to all our esteemed shareholders, who has been a shareholder of An Phat Plastic and Green Environment JSC in the past year. To the Company, 2016 really is the year of success, with the highest revenue and profit since establishment as well as from listing. With regard to financial results of 2016, we estimate that consolidated revenue and profit after tax reach around VND2,000 billion and VND143 billion, respectively 24% and 3.6 times higher than 2015.

     This result is created with the contribution of all the leaders and employees of the Company, as well as the support and feedback of the shareholders in IR events, seminars and roadshows, etc.
     Looking back on 2016, we have doubled the sales volume in the Japanese market, a demanding market that we have to take 2 years to reach, helping Vietnam to rank second in the list of exporter of PE bags into Japan, only below China. We also completed Factory No. 6A to put into test operation for official production in December.
    Our efforts have been recognized by investors, reflected in three-time growth of the share price. At the same time, investors holding warrants also lay their trust on us to postpone the exercise time of a large proportion of warrants to 2018. Our employees also pledged not to sell the shares until 3 years later.
     For the year of 2017, we realizes favorable opportunities as well as significant challenges, which requires both internal resources of leaders and staff and external forces of Shareholders.
     Oil price fluctuation is unpredictable, therefore, we must consider carefully the time of procuring raw materials to help reduce the risk of sudden increases in resin price. Regarding expanding customer network with higher quality requirements, we must accelerate the process of investment and employee training as well as innovate products with high profit margin. Thanks to experienced management board, skilled workers and modern machinery, Factory No. 6 is expected to boost efficiency and product quality so as to improve profit margin for the whole company in 2017.
     Beside the demand for plastic bags, the demand for CaCO3 filler is growing. The Factory in Yen Bai has not been able to make enough production to meet orders. Along with the growing needs of An Phat, the parent company, we decided to double Yen Bai Factory capacity since 2017. In respect to Yen Bai Factory, we expect its sales and profits will increase by several times next year.
    In order to optimize resources, we will restructure passive investments including investments in VBC. VBC has high growth potentials and profitability, but we see other opportunities to actively invest in the sector of plastic packaging and CaCO3 Filler production, so we planed to divest in VBC.
     Without taking into account any extraordinary profits, we estimate that revenue and net profit of 2017 will respectively reach VND2,900 billion and VND200 billion, increasing continuously by 45% from  VND2,000 billion and 40% from VND143 billion compared to 2016 to ensure that profit growth at faster rate than capital raising for sustainable earnings per share growth.
    Along with the progress of production and business, we are also committed to transfer listing of AAA share to Hochiminh Stock Exchange, with an expectation that many investors have the opportunity to reach more AAA shares.
     At the same time, for the purpose of capital optimization, we are going to list share of An Phat Yen Bai Mineral and Plastic Joint Stock Company in 2017, which enhances transparency for not only the parent company but also the subsidiary.
     I am pleased to thank you for the confidence of participating in the purchase of our bonds with warrants when we were actually in need of capital to build the Factory No. 6. The exercise price was set higher than the market share price, so they have to accept more risk than shareholders who buy share in the market at that time.
    The first batch of warrants (50,650 warrants, respectively 5.065 million shares) will be exercised in December and listed in early 2017. The number of shares outstanding is less than 10% diluted while expected profit growth is 40% in 2017. So, we believe that existing shareholders have nothing to worry about dilution. We are committed to always ensure stable growth of shareholder interests over the years because we, the Board of Management and all the employees, is the largest shareholders of An Phat and significantly affected from any dilution. 
     With sincere thanks and appreciations,
 
Chairman of the BOM

 


PHAM ANH DUONG

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