PETROVIETNAM FERTILIZER & CHEMICALS JSC (Ticker DPM)

1 www.dpm.vn
 Contents
1 • Company’s profile

2 • Business Performance

3 • Development Strategy

4 • CSR & Brand Equity

5 • VN Fertilizer Market

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 1 • Company’s profile

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 Key notes
• A member of Petrovietnam, founded in
2004.
• Owner of the first gas-based urea plant in
Vietnam.
• Leading producer and trader of fertilizers
in Vietnam, supplying 40% of domestic
urea demand.
• Nationwide distribution network with
around 3,000 points of sales.
• Listed on HoSE in 2007, 380 million
shares.

Headquarter: Ho Chi Minh city

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 Phu My Fertilizer Plant

•Location: Ba Ria - Vung Tau Province

•Capacity: 800,000 T/year (Prilled urea)
• Licensor: Haldor Topsoe: Ammonia
Snamprogetti (Saipem SPA): Urea
Mitsubishi Heavy: CO2 recovery
Certificate of Operational Exellence from Haldor Topsoe A/S (World record
for 188-day consecutive operation)
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 Shareholder structure

Petro Vietnam

21.34 Deutsche Bank AG London

6.95
Market Vector Vietnam ETF
5.95 61.37
4.89
Key shareholders (Norges
Bank, GIC, Wareham
Group…)
Others

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 Shareholder structure
Foreign
institutional Local individual
24.36% 10.36 %

Foreign individual
0.28% Local individual

Local institutional

Foreign individual
Local institutional
65%
Foreign institutional

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 Business positioning
To become a top – ranking player in fertilizer and chemical industry in
Vietnam and SEA region

A major supplier of
chemical products: Supporting services:
Leader in fertilizer
industry: -UFC85 and Formaldehyde - Packaging plant (44 mil
- Urea producer: 40% - Petrochemical Plant packages/year)
market share (800k/year) - NH3 expansion - Operation & management
- NPK producer: premium - H202 services to other urea
segment (250k/year -2017) plants & technical services
- NH3 - NH4NO3 (Nitrat to farmers
- Trading other fertilizers: Amon)
NPK, SA, Potassium, DAP… - Real estate management
- Polystyrene, Methanol, (warehouses, head offices,
after 2020 exhibition centre…)

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 Market advantages

Strong distribution network:

Trusted brand: Value-added services: 04 regional member
High quality package of Phu Giving best usage solutions companies, 01 branch in
My fertilizers (Urea, NPK, and technical supports to HCMC, 01 Ref Office in
Potassium, DAP..) farmers Myanmar, 30 warehouses
(250MT)

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 High-Quality Phu My Fertilizer Package

Phu My Urea
sales in 2014:
800,000
tons

Sales of other
fertilizers in
2014:
380,000
tons

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 Strong distribution & client network

PVFCCo

PVFCCo PVFCCo South PVFCCo South Branch in Rep. office

PVFCCo North
Central East West HCMC Myanmar

3 branches, 33 2 branches, 20 4 branches, 21 2 branches, 29

level-1 agents level-1 agents level-1 agents level-1 agents 11 Branches
129 wholesalers
3,000 sales points
30 warehouses
869 level-2 813 level-2 760 level-2 850 level-2
agents agents agents agents

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 DPM market share by region
DPM ‘s urea market share by region

Northern Southeast
DPM’s urea market share in VN
25% 25%

75% 75%
40%

60%
Central - highland Southwest

65% 35% DPM Others

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 2 • Business Performance

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 Challenging context in 2014
- Strong distribution network
- Stable supply and high quality (sales and after sales
services)
- Trusted brand

- More competition: New suppliers

- The average selling price of Phu My urea fell
11.6% yoy
- 2014 average gas price increased 3.35% YoY
- Transportation cost increase
- Interest rates cut

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 Gas price in 2014 rose 3.35% yoy
9
8
6.69
7 7.38 7.49 7.63 7.43 7.36 7.17 6.33
6 6.69 6.69
5.79
5
4 4.63
3
2
1
0
Jan Fer Mar Apr May June July Aug Sep Oct Nov Dec
The Formula (From Q2/2014 to Q4/2014) :
P = 46% x MFO + transportation tariff
• MFO: The monthly average FO price in Singapore market
• Transportation tariff = 0,63 USD/MMBTU

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 Urea price on downtrend in 2014

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 PM urea price movement
Price : VND/ kg

Plan 2014

Q1 Q2 Q2 Q3 Q4

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 EST 2014 Performance
Target Unit 2014 Plan Est.2014 (% ) of 2014 plan

Urea production Thousand tons 800 840 105

Phu My Urea Sales

Thousand tons 800 840 105
volume
Trading volume
Thousand tons 330 380 115
of other fertilizers

Chemical products Thousand tons 4.2 3.17 76

Trading volume of
Million bags 46 49.6 108
packing

Revenue Million USD 414 475 115

Profit before tax Million USD 50 66.2 132

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 Financial summary : Strong cash flow
Unit: Million USD except EPS and Percentage (Exchange rate 1 USD = 21,000 VND)

Target 2011 2012 2013 2014 EST

Revenue 464.9 662.2 493.5 475

Profit after tax 147.8 148 102 59
EPS (VND/stock) 8,220 7,990 5,644 3,175

Payout Ratio (%) 43 57 86 78.7

ROE (%) 43 35.1 24.2 13.47

Cash & Cash 193.8 268.1 192 246
Equivalent
Short-term debt 41.1 65.2 58.2 48.6
Long-term debt 0.9 0.9 1.3 1.5
Net debt (151.8) (200.7) (132.5) (195.7)

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 New Petrochemical Plant
• The new petrochemical plant starts
production in May 2014, supplying
chemical products for oil and gas
exploration, for oil refinery plants;
• Location: Vung Tau province
• Capacity: 4.000 Tons (25,000
barrel)/per year;
• Technology partner: Baker Hughes;
• In 2014: Supplying than 15,000
barrels, earning a revenue of 200
billion VND.

www.dpm.vn 20
 Launching Jumbo Packaging System
In 2014, the Jumbo packaging system in Phu My Fertilizer Plant starts
operation to pack big-size bags (500kg-1,000kg), for the first time allowing
PVFCCo to export 878 tons of Phu My urea in Jumbo bags to New Zealand and
Jordan.

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 2015 CONTEXT: MORE CHANLENGING
- As oil price continues to drop -> gas price and
transportation cost will reduce
- Phu My Urea remain the No.1 fertilizer brand
(Neilson Research)
- New project to start operation (UFC 85)
- Low inflation rate
- Oil price forecast continue to drop ->
agriculture production drop -> fertilizer
demand decrease -> urea price estimated to
fall 5%-10% in 2015.
- New VAT law will increase costs
- Over supply situation (Ha Bac expansion to
500,000 tons/year)
- Operation risks
- Currency exchange risks

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 GAS PRICE ROADMAP TO 2019

P = 46% x MFO + transportation tariff

In which:
P: Gas price
MFO: The monthly average FO price in Singapore market
Transportation tariff : Fixed at 0.92 USD/MMBTU for 2015;
0.94 USD/MMBTU for 2016, 0.96 USD/MMBTU for 2017; 0.98
USD/MMBTU for 2018 ; 1 USD/MMBTU for 2019.

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 2015 KEY TARGETS
Target Unit 2015 Plan
Urea Production tons 780,000
Urea sales tons 800,000
Other fertilisers tons 339,000
Export tons 50,000
Chemicals tons 6,510
Packages Million 55
Revenue Million USD 440.3
Profit (before tax) Million USD 44.2

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 3 • Development strategy

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 Key divers for future growth

Product diversification
Chemical products to to push sales:
contribute 40-50% of Trading expansion: To
New plant (NPK Plant –
total revenue: reach export volume of
250K/Y)
200K tons after 2017
NH3, UFC85/Formalin, Target sales growth of (25% of total sales)
H2O2, Nitrat Amon… 5%-10% to reach 1.4
million tons in 2017

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 On going projects
Total
Project investment Current Status
(mil. USD)
NH3 plant revamp Plan
- Capacity 90,000 tons/year ; 191 Project investment study has been approved by PVN and
- Time of completion: 28 months; Disbursement Ministry of Industry and Trade.
- Input material: natural gas (NH3-NPK The ECP contract to be signed in Q2/15, complete and put into
- Market : domestic combined): operation in 2017
2014: 1.25% IRR: 15.2% (NH3-NPK combined)
2015: 30% ROE: 26.8% (NH3-NPK combined)
2016:55%
2017:13.75%
NPK Plant- based on chemical processing
- Capacity: 250,000 tons/year 53 Project investment study has been approved by PVN and
- Input materials: H3PO4 (Phosphoric Ministry of Industry and Trade.
acid) + NH3 + DAP The ECP contract to be signed in Q2/15, complete and put into
- Market: Domestic operation in 2018
UFC85 /Formaldehyde project (aim to increase the urea quality : anti-caking, hardening the urea granule)

- Capacity: 15,000 tons UFC85 or 22 EPC contract signed in March 2014 , completion in 19 months
25,000 tons Formaldehyde/year Disbursement: ROE: 16%
- Input materials: Methanol, urea 2014:30% IRR: 14.6%
- Market : Domestic 2015:70% Gross margin: ~30%
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 Long run projects
Project Status
Petrochemical Complex

- Products: Series of derivatives of Methanol such as Olefins, SM, PS Pre-Feasibility study phase
- TIC: 1.9 ~ 3.1 billion USD Expected commercial operation: 2021
- Input material: Newly found Blue Whale gas
- International experienced partners (both in technology &
marketing) is welcomed.
-Location: Central of Vietnam
-Market orientation: Domestic and export

Polystyrene

- Capacity: 300 KTA Pre-Feasibility study phase

- TIC: 170 million USD Expected commercial operation: 2020
- Investor: PVFCCo
- Input material: SM from export or future domestic resource
-Location: Southeast of Vietnam
-Market orientation: Domestic
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 Long run projects
Project Total investment Curent Status
(mil. USD)

H2O2 Project (Hydrogen peroxide):

- Capacity: 30,000 tons/year 20 EPC Tendering phase. Completion of

-Input : Surplus Hydrogen from Phu My selection EPC contractor to be completed in
Fertilizer Plant. 2014.
-Location: Phu My Industrial Zone
-Market orientation: Domestic

Complex plan : Ammonia (NH3) + Ammonium Nitrat (NH4NO3)

- Capacity : 450,000 tons NH3 & 900 Continuing with gas source review and study
200,000 tons NH4NO3. as to complete overall investment study
- Input material: natural gas (PVFCCo
will joint venture with other partners)
-Location: Central of Vietnam
-Market orientation: Domestic& export

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 Execution Progress
Disbursement in 2014: 360 billion VND, or 88% of 2014 plan

- Tendering and site check.

NH3 plant revamp - EPC signing estimated in Q1/20145.
and NPK plan project

UFC85/formaldehyde Progress to the end of 2014 : 31% has been

Project completed.

Jumbo packaging Start production in Q4

project

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 Trading expansion

Key export markets:

Imports: NPK, Potassium, SA,
Cambodia, Myanmar, Thailand,
DAP...
Malaysia, Taiwan, Japan,
Trading partners: Transamonia Korea, Philippines…
(USA), Emerpora (Swiss),
Trading branches: HCMC
Phosagro (Russia), Mekatrade
Branch, Ref Office in Myanmar
& Namhae (Korea)
(since 2013)

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 Export targets
• Thailand, Myanmar, Cambodia,
Target markets Philippines, Malaysia, Japan, New
Zealand…

Target export volume • Sales: 29K tons in 2014 -> 50K tons in
and sales 2015

• High quality products

Key competitiveness • Transportation advantages: 3-5 days
from Vietnam compared with 40-60
days from Middle East or Baltic

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 4 • CSR & Brand Equity

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 Leading in CSR activities

Giving gift to dioxin victims Granting Scholarship Building houses for poor people

Awards for outstanding young farmers Supporting the invalids Giving “Tet gift” to poor people

Total budget from 2008-2014: 33 Million USD

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 Brand equity

• First class State Labor Medal

• Top 10 Vietnam Gold Star Award
• Golden Stock Award – 2011, 2013
• Vietnam Golden Cup of Construction Quality
2010
• Green Brand for Environment Award
• “For Rural and Agricultural development”
Award
• Annual Report Awards: Top 10 (Vietnam),
LACP Platinum Award (US)

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 Brand equity

PVFCCo wins Top 10 of Annual For the second straight time, PVFCCo was
Report Award 2014 found in Forbes Vietnam’s 50 best Vietnamese
listed companies.

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 Brand equity
Phu My Urea received quality certificate PVFCCo awarded “The best Equitized
in Japan Company”

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 5 • Vietnam Fertilizer Market

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 Agriculture and fertilizers

Agriculture sector target growth: 3.5% - 4% in 5 years:

• 70% of population earn livelihood from agriculture

• Total farming area: 11 million ha
• Key products: Rice, rubber, cashew, pepper, fruits…
• Agriculture sector growth reached 6.85% in 2013 via GDP growth of
5.98% (www.chinhphu.vn)

Fertilizer market growth: 3% per year (NPK: 7% per year)

• Fertilizer demand in 2014: 11 million tons
• Domestic supply: 80%
• Usage trend: Combined fertilizer (NPK)
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 PM urea market share by region & demand

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 Seasonal demand for urea
Unit: Thousand tons

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 Regional urea supply and demand
Total demand : 2.2 million tons Total supply : 2.66 million tons

Ha Bac Fertilizer – 500,000 T

Ninh Binh Fertilizer – 560,000 T
Supply – 1,060,000 T
Demand in Northern area– 700,000 T

Demand in Central area– 400,000 T

Phu My Fertilizer (PVFCCo) – 800,000 T

Demand in Southern area– 1,100,000 T Ca Mau Fertilizer – 800,000 T
Supply – 1,600,000 T

Source: PVFCCo

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 Vietnam urea production output
UREA PLANTS CAPACITY 2003 - 2015 (e.)
3,000

2,500
Ninh (Vinachem) 560
www.dpm.vn 560
2,000 Bình
'000 metric ton

504
Cà Mau (Petrovietnam) 392
1,500 800
Phú Mỹ (Petrovietnam) 720 800
560
1,000 Ha Bac (Vinachem)
800
765 749 756 807 801 800 800 800
500 646 617
209 500
148 147 166 175 158 187 190 147 194 190 190 190
-
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: MARD

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 Thank you !

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