Saigon Cosmetics expects big shareholders like HSC to help the Company increase its internal resources and seize new opportunities.
If successful, after the offering of more than 1 million individual shares (expected to end on October 24), Saigon Cosmetics Joint Stock Company (SCC), under the brand Miss Saigon, will have two new shareholders. Ho Chi Minh City Securities Corporation (HSC) and Mr. Ngo Hung Dung. HSC estimates to spend at least VND 17 billion to hold nearly 9% of SCC’s charter capital.
This will be a special event, because SCC has never invited a financial institution in the role of a major shareholder. Previously, according to the prospectus, major shareholders in SCC included Satra, Nguyen Kim Thoa (holding 15% of charter capital), Ly Nguyen Lan Phuong (7.65%), Huynh Khone (6.55%), Lee Juay Meng (Singapore, 7.22%). Last November, Satra auctioned, divesting all 7.3% of its capital from SCC.
Now, HSC’s presence is expected to blow new air into SCC. Based on the criteria for selecting investors, such as abundant financial capacity, long-term investment plan, and support SCC in terms of management, finance, market and technology; Having the ability to communicate and promote the brand, it is clear that SCC expects support from major shareholders, not just capital contribution.
In the immediate future, SCC plans to use the proceeds of nearly VND 22 billion to invest in equipment, upgrade factories and develop a system of 10 stores in Ho Chi Minh City and Hanoi.
In the longer term, according to the published documents, SCC needs major shareholders to accompany in many transformation strategies. HSC has not disclosed details of the deal as well as support and interventions at SCC. According to the explanation of the Company’s leaders, this is a business related to investment banking (IB) of HSC and between the two parties has made confidentiality commitments on business information.
Saigon Cosmetics was a famous company, formerly known as Immorter perfume company before 1975. After that, the Company was transferred, underwent many changes and became a state-owned enterprise, under the Department of Industry and Trade. HCMC. So far, SCC has been equitized, reaching the charter capital of nearly VND 80.6 billion. The size of this capital will increase after the private placement and due to SCC’s plan to issue preferred shares to employees in 2019.
SCC desperately needs to increase its size and financial capacity to strengthen its position. According to Mr. Nguyen Van Minh, Chairman of the Vietnam Association of Cosmetics, Fragrances and Essential Oils, Vietnam’s cosmetics market is very potential, with an annual double-digit growth rate.
By 2020, the market size is expected to reach 2.2 billion USD. However, as concerns of SCC, up to 90% of Vietnam’s cosmetics market is in the hands of foreign companies. Meanwhile, a number of domestic enterprises also produce poor quality goods, fake goods, fake goods. All of this creates considerable pressure on SCC. Before the arrival of cult brands like Chanel, Dior, Kenzo, Burberry, Gucci, Versace …
SCC used to choose the main export method, with exports normally accounting for 60% of the Company’s total revenue before 2006. But later on, the Company oriented to return to the domestic market but prioritizing the high-end segment. SCC has improved the product, built a professional Miss Saigon image, increased the exposure to young customers and collaborated with foreign design units to create impressive designs. The company also promotes outsourcing activities for foreign partners, participates in real estate investments, develops beauty services. In 2017, there were more than 100 new products such as shampoo, hand wash, and room spray … launched by SCC.
Thanks to these changes, SCC has initially achieved positive results. If in the period of 2012-2014, SCC grew by an average of 7% per year, but by 2015, this figure had reached 50%. By 2016-2017, eliminating the real estate factor, SCC’s revenue growth continues to be high of 2 digits. The company maintains export operations to nearly 20 different countries.
However, SCC always faces market risks as more and more foreign and domestic cosmetic firms are coming in. At the Mekong Beauty Show 2018, there are 110 Korean businesses seeking business opportunities in the Vietnamese cosmetics market.
Another challenge is the tendency to choose natural, organic (friendly), safe and safe cosmetics. SCC acknowledged that it wanted to create natural cosmetics that could compete with foreign goods, need a lot of investment capital, improve technology, upgrade personnel …
However, with the help of major shareholders such as HSC, SCC can increase internal resources and seize new opportunities and accelerate development. Because cosmetic consumption of Vietnamese people is now 4-5 times lower than other countries in the region; Especially the middle class – potential customers of the cosmetics industry – can double, reaching 33 million people by 2020.
* Source: Investment bridge