SHINPETROL: Success from Effective Investments

Shinpetrol is one of the best subsidiary companies of VINASHIN Corporation, with its main activities of sea and river transport; production and trading of petroleum products and LPG; shipping agency and brokerage; and investment in other industrial and residential works. It greatly benefits from its successful investment and luring investors to its business.

 

Shinpetrol is building Dinh Vu LPG depot in northern Haiphong City, an oil and LPG depot in a Vinashin shipbuilding industry complex in Long An province and a petroleum depot in Danang City, and is studying the construction of the Hai Ha petrochemical refinery project. To decentralise the management, Shinpetrol has completed procedures to establish North Shinpetrol One-member Co. Ltd and South Shinpetrol One-member Co. Ltd to trade gas and develop distribution networks for Vinashin Gas.

Ocean shipping is another strong point; Vinashin is not only known as the largest shipbuilder in Vietnam but for its strong ship fleet. Under the roadmap, Shinpetrol will continue developing ship trading, expanding its ocean-going ship fleet, and focusing on implementing ship building deals with Vinashin to bring more ships into service by late 2008. Shinpetrol will set up joint stock companies to build and repair ships and oil platforms in Cam Ranh Bay, Khanh Hoa Province. It will also construct shipyards to make ships of 100,000 DWT in Cai Mep-Thi Vai area in Ba Ria-Vung Tau province, build the north-south shipway system at sea and build 500-ha Vinashin-Long An shipbuilding industry complex, which consists of a general port, container yards and facilities for the shipbuilding, petroleum and energy industries.

Besides, Shinpetrol is developing real estate projects and building residential and apartment areas in Hanoi and Ho Chi Minh City. The company cooperates with its four strategic partners, BIDV, PetroVietnam, Viettel and Ba Son Shipyard, to study a project building a 98-storey international commercial and financial tower on 20 hectares in Ba Son shipyard. It also joins hands with CKD Novenergo under Czech Republic’s CKD Group, a world leading engineering company, to set up a company specialising in manufacturing equipment for petrochemical, gas, hydropower and wind-power projects.

The clearest proof for Shinpetrol’s success in investment is the building of the Nam Viet petrochemical refinery in Hung Phu Industrial Park 2, Can Tho City. The 9.2-ha refinery, covering 6.2 ha in the first and second phases, with 3 ha for later expansion, cost US$12.5 million in the first phase and is expected to start operation in the fourth quarter of 2007. Shinpetrol now holds 51 per cent stake in Nam Viet Joint Stock Company, which operates a 1,000-DWT pier for oil tankers and a 500-DWT pier for solid products; produces tanks at 2,000 units per day in the first phase; refines petrochemicals (DO, KO, FO, LPG and kerosene), resins, detergents, rubber additives, glues, pesticides and fertilizers with an annual output of 100,000 tonnes in the first phase and 1,000,000 tonnes in the second phase; and invests in developing warehouses. The project is calculated to offset investment costs after three years of operation. The net present value (NPV) is VND149.299 billion (US$9.37 million) and the internal ratio of returns (IRR) is 23.46 per cent.

At present, the total capital of Shinpetrol is estimated at VND740 billion. The firm has consolidated its foothold in shipping and LPG trading. In 2007, Shinpetrol targets to exceed VND850 billion revenue and pre-tax profit of VND30 billion. In the first six months of 2007, the company recorded VND365.1 billion revenue and pre-tax profit of VND28.7 billion.

Shinpetrol is rated as a high development growth firm, among those listed on the Vietnamese stock market. Its shares are coded VSP on the Hanoi Securities Trading Centre (HASTC). Shinpetrol plans to issue more shares to raise its registered capital to VND140 billion to invest in more projects. Currently, Vinashin is capable of building 80,000 tonne ships, repairing 40,000 tonne ships, and producing steel stakes and components for ships. By 2010, Vietnam will be a world-leading shipbuilder with 60-70 per cent of components sourced locally.