Vietnam is top investment destination in Asean for CPF

CPF plans to invest Bt2 billion-Bt3 billion in Vietnam and Bt400 million-Bt500 million each in Cambodia and Laos. The scale of investment is in line with the population of those countries – 90 million, 8 million and 5 million. The focus will be on its strengths, including farming, feed production and food business operations, to ensure integrated manufacturing from upstream through downstream.
Despite the rise of Myanmar, the company is in no rush to start up any new businesses there, preferring to wait for a suitable time. Any trading business of the company there has been managed by parent company Charoen Pokphand Group, which established an agro-industrial business there 15 years ago. Investment in the country will start in two years, after the government puts in place investment regulations and a financial system to facilitate trade.
CPF’s international investment takes two forms – engaging in mergers and acquisitions in developed markets and opening its own basic manufacturing plants, particularly for feed and food, in emerging and developing markets. Either way, the main objective is to capture the local market to overcome rising trade barriers.
“M&A is one of CPF’s important stratagies to ensure the company’s sustainable growth,” Adirek Sripratak, president and CEO, said last week.
For instance, the company’s successful acquisition early this year of CP Pokphand, a listed company in Hong Kong that manages the group’s business in China and Vietnam, has pumped up CPF’s revenue from more than Bt200 billion to Bt300 billion.
A new acquisition that the company is negotiating is expected to be completed this year. However, he declined to specify the type of business, saying only that it will reinforce the company’s agro-industrial business.
There are also many areas for the company to take over companies in Europe and Asia in particular, with a combined 3 billion consumers.
“CPF’s strength is in Asia where we enjoy high growth and M&A will encourage synergy. We will consider talking with both brand and non-brand manufacturers,” he said.
Expansion overseas will also support the company’s revenue restructuring. Overseas operations will contribute about 60 per cent of revenue in the near future with the rest coming from domestic sales and exports.
The company’s foreign-exchange earnings now contribute more than half of its total sales. It targets to increase sales by an average of 10 per cent annually.
Recently, Adirek joined CP Group executives led by chairman Dhanin Chearavanont on a trip to Brazil to explore business opportunities and learn about the modern technology employed in mega-farms, which start in size from 100,000 rai of land. Soybeans, maize and sugarcane all have potential for the group’s investment.
The company’s total capital expenditure budget has been set at Bt15 billion, of which business development abroad, focusing on feed mills and farming, accounts for 60-70 per cent. The remaining budget will be spent on business development in the domestic market for finished products and marketing networks.