Baosteel Packaging plans to invest 525 million yuan to build a production base in Vietnam, and overseas business accounts for 24% of the "internal and external linkage" strategy.

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Zhang Lu

Baosteel Packaging, a leading domestic metal packaging company, (601968. SH) is accelerating the pace of expansion.

Recently, Baosteel Packaging announced that the company plans to build a new intelligent aluminum two-piece can production base in Long An Province, Vietnam, with a total investment of about 525 million yuan and a designed annual production capacity of 800 million cans. The project aims to promote the strategy of "internal and external linkage", optimize the layout, improve the customer's supporting supply service capabilities, and further expand the Southeast Asian market.

It is understood that Baosteel Packaging is mainly engaged in the production of fast-moving consumer goods metal packaging such as food and beverages, including metal two-piece cans and supporting easy-to-open lids, printed iron products and new material packaging.

From the perspective of performance, in 2023, Baosteel Packaging will achieve revenue of 7.76 billion yuan and net profit of 219 million yuan. In the first quarter of 2024, the company achieved revenue of 1.982 billion yuan, a year-on-year increase of 12.65%; net profit was 56 million yuan, down 8.92% year-on-year. In the context of increasingly fierce competition in the domestic market, Baosteel Packaging regards going overseas as an important strategy.

The Yangtze River Business Daily reporter noticed that since 2011, Baosteel Packaging has opened overseas factories in Vietnam, Malaysia and Cambodia, forming a "three, four, five production line" layout in the Southeast Asian market. According to the financial report, in 2023, the company's overseas business will hit a record high, achieving revenue of 1.890 billion yuan, a year-on-year increase of 8.39%, and the proportion of overseas business in total revenue will increase to 24.36%.

It is planned to invest 525 million yuan to build a production base in Vietnam

Recently, Baosteel Packaging announced that in order to optimize the layout, strengthen the regional synergy with the existing production base, improve the customer's supporting supply service capabilities, and further expand the Southeast Asian market, the company plans to build a new canning production base in Long An Province, Vietnam, with a total investment of about 525 million yuan.

According to the announcement, in order to cooperate with the smooth development of the project construction, Baosteel Packaging plans to take its wholly-owned subsidiary, Vietnam Baosteel Can (Hue) Co., Ltd. as the main investor, and establish Vietnam Hue Baosteel Can Long An Branch in Phu An Thanh Industrial Zone, Long An Province, Vietnam, with an estimated construction period of about 20 months (subject to actual construction).

It is reported that the project will build a new aluminum two-piece can production line, and supporting public auxiliary equipment and production, living facilities, the project design annual production capacity of 800 million cans, to meet the demand for cans in the Vietnamese market. Among them, 318 million yuan of the project construction funds will be provided by Baosteel Packaging through its wholly-owned subsidiary, Perfect Packaging Industry Co., Ltd., to increase the capital of Hue Canning in Vietnam, and the rest will be raised by Long An Branch.

In the view of Baosteel Packaging, this project is in line with the company's "internal and external linkage" strategy, further expands overseas business development opportunities, improves customer supporting supply capacity, has good market prospects and economic benefits, and is conducive to enhancing the company's comprehensive competitiveness and long-term development.

In fact, the Yangtze River Business Daily reporter noticed that in recent years, Baosteel Packaging has promoted digital and intelligent transformation, deepened the management model of "one headquarters and multiple bases", significantly enhanced its core competitiveness, and strengthened its leading position in the market segment of metal beverage cans. At the same time, we continue to optimize the layout of production capacity. In 2023, the company will promote the implementation of the "internal and external linkage" strategy and accelerate the process of international development.

According to the data of the 2023 annual report, last year, Baosteel Packaging's overseas business hit a record high, achieving revenue of 1.890 billion yuan, a year-on-year increase of 8.39%, the proportion of overseas business in total revenue increased to 24.36%, and the gross profit margin also increased to 11.39%, achieving "three growths".

It is understood that the rapid growth of the company's overseas business, on the one hand, due to the growing demand of overseas customers in the downstream of Baosteel packaging, on the other hand, also thanks to the company's new production lines in Southeast Asia and other places, to further enhance the scale and supply capacity, and to achieve a leading position in the competition with domestic and foreign enterprises in the same industry.

According to the financial report, in 2023, Baosteel Packaging's new intelligent aluminum two-piece can project in Cambodia will be completed, realizing the full line of production lines, which marks the formation of Baosteel Packaging's layout of "three countries, four bases and five production lines" in Southeast Asia.

In addition to overseas Cambodian projects, Baosteel Packaging's domestic projects under construction have also made new progress. Among them, Guizhou Baosteel cans were put into operation in the whole line, and the average daily output in the first month set the best record for new projects in the industry, and the annual output of cans can be 1 billion cans after reaching production; In addition, the company's production line Anhui Baosteel canning project (phase I) has also been completed and put into operation, which will improve the company's local production capacity layout and consolidate and enhance the company's leading position and competitiveness in the regional market.

It is planned to raise 698 million yuan to improve the business layout

According to the data, Baosteel Packaging was founded in 2010 and listed on the Shanghai Stock Exchange on June 11, 2015. Its main business includes the production and manufacturing of metal beverage cans and supporting easy-to-open lids and packaging color printing iron products, mainly serving carbonated beverages, beer, tea beverages and food enterprises.

At present, Baosteel Packaging has established long-term and stable cooperative relations with well-known FMCG brand customers at home and abroad, such as Coca-Cola, Pepsi-Cola, Snow Beer, Budweiser, Tsingtao Beer, Wanglaoji, Wahaha, etc. The controlling shareholder of the company is Baosteel Metal Co., Ltd., and the ultimate controller is the State-owned Assets Supervision and Administration Commission of the State Council.

From the performance point of view, at the beginning of the listing, the profitability of Baosteel Packaging was under pressure, and the net profit declined for three consecutive years. According to the financial report, from 2015 to 2017, Baosteel's packaging revenue increased from 3.3 billion yuan to 4.546 billion yuan, an increase of 37.8%; The net profit was 87.35 million yuan, 9.885 million yuan and 6.631 million yuan respectively, down 32.09%, 88.68% and 32.92% year-on-year respectively.

Since then, Baosteel Packaging has continued to expand the market, improve the layout of production capacity, and its performance has gradually recovered, and the company's revenue and net profit have both increased. According to the data, from 2018 to 2022, Baosteel's packaging revenue increased from 4.977 billion yuan to 8.543 billion yuan, an increase of 71.76%; Net profit increased from 41.89 million yuan to 268 million yuan, an increase of about 5.4 times.

In 2023, due to the severe challenges of slowing downstream demand growth and large market fluctuations, the company took the initiative to take measures to ensure production and promote operation and strengthen regional coordination, but its performance still declined, with revenue and net profit of 7.76 billion yuan and 219 million yuan respectively last year, down 9.16% and 18.58% year-on-year respectively.

In the first quarter of 2024, the company's performance is still under short-term pressure, achieving revenue of 1.982 billion yuan, a year-on-year increase of 12.65%; net profit was 56 million yuan, down 8.92% year-on-year.

However, from the perspective of the industry, the future space of the metal packaging industry is huge. According to the relevant data of Baosteel's packaging announcement, the per capita annual consumption of beverage cans by Chinese residents is less than 40 cans, which is far lower than the number of beverage cans consumed per capita by developed countries by 200-300 cans; From the perspective of beer canning rate, China's beer canning rate is still significantly lower than the beer canning rate of 50%-70% in developed countries.

At present, with the continuous increase in urbanization rate, the gradual increase in disposable income of residents, and the continuous recovery of the macro economy, China's consumer market has huge potential and will maintain long-term stable growth. Beverages and beverages are the main downstream applications of metal packaging, and the canning rate of beer continues to increase, which continues to contribute to the incremental demand, which will also drive the overall demand for metal packaging products.

In this regard, Baosteel Packaging said that it will follow the growth trend of downstream demand and further expand the production capacity of new production lines. It is worth mentioning that at the beginning of this year, Baosteel Packaging disclosed a non-public offering plan, which intends to raise no more than 698 million yuan for the construction of domestic and foreign production base projects, etc., and the smooth implementation of the project can effectively improve the company's production capacity.

It is reported that the investment project aims to strengthen the company's production capacity layout in East China, Southwest China and Southeast Asia, and the construction of new projects in Cambodia and other regions will help consolidate the company's strategic layout and market position in Southeast Asia.