An important source of revenue from PVMachino’s joint ventures

Company information
icon date22/07/2023

PV Machino Petroleum Machinery and Equipment Joint Stock Company is a typical enterprise that succeeds in taking advantage of revenue when entering into joint ventures with many partners.

Joint ventures are an important source of income

On the current exchange of UPCoM, there are many stocks formed from profits from joint ventures such as: HEM, VEAM, Protrade, PV Machino, Vinafor, Hanel…

Profit from joint venture of VEAM

These joint ventures are mainly foreign-invested (FDI) projects. In which, state enterprises will contribute capital with land use rights, while foreign enterprises will contribute money and technology.

However, the main business activities are not effective and many shareholders are looking forward to restructuring, improving labor productivity, and increasing business performance.

According to the example of Vietnam Motor and Agricultural Machinery Corporation, abbreviated as VEAM, there are joint ventures with many famous motorcycle and automobile brands in the world such as:

  • 25% stake in Ford Vietnam joint venture,
  • 30% shares of Honda Vietnam,
  • 20% stake in Toyota Vietnam…

Most of the profits of this company come from the joint venture, so it can be recognized that the joint venture has helped the business grow more.

For many years in a row, VEAM often has a situation where the profit after tax is higher than the revenue from its main business. The abundant cash that VEAM deposits in the bank is also thanks to the dividend cash flow from Honda, Toyota and Ford.

According to the 2018 financial statements, VEAM’s main business revenue reached VND 7,070 billion, but received a profit of VND 6,852 billion in joint ventures. That is not including 416 billion dong of financial revenue, mainly from deposit interest. As a result, VEAM reported a net profit of VND 7,047 billion in 2018.

In 2019, according to the parent company’s financial statements, VEAM achieved sales revenue of VND 685 billion, gross loss on sales of VND 337 billion. Thanks to the revenue from financial activities of VND 7,827 billion, at the end of the year, the Corporation still achieved a profit after tax of VND 7,043 billion.

Profit from PVMachino’s joint venture

PVMachino is a developer in joint ventures with many major partners, especially with foreign-invested projects.

25 years ago, when it was still a state-owned enterprise, PVMachino held 30% of joint ventures with Japanese partners: Nippon Seiki, Showa, FCC – companies specializing in the production of auto and motorcycle parts.

After equitization, PVMachino only holds 10% capital in FCC Vietnam Co., Ltd., 10% capital in Vietnam Nippon Seiki Co., Ltd. and 8.45% capital in SHOWA Vietnam Motorcycle and Automobile Parts Co., Ltd.

The above are the leading enterprises providing spare parts and accessories for famous motorcycle manufacturers: Honda, Yamaha, Suzuki… These joint ventures earn trillions of dong a year and share profits with PVM every year. 80-100 billion VND year.

PVMachino’s financial reports over the years show that, in 2016, PVM received more than 100 billion dong in dividends and distributed profit, nearly 84 billion dong in 2017 and more than 80 billion dong in 2018.

In 2019, PVM received VND 81.3 billion in dividends and distributed profits. Meanwhile, gross profit on sales and service provision in 2019 was 21 billion VND, in 2018 it was 15.7 billion VND, in 2017 it was 27.8 billion VND.

Profits of some other businesses thanks to joint ventures

Some other enterprises such as Vinafor are also entering into joint ventures with firms of Hong Leong Industrial Company (Malaysia), Yamaha (Japan), joint venture in paper production with Japan’s Sojitz Group and India’s JK Paper…

In the years 2018 and 2019, the profit shared from these joint ventures accounted for about 90% of Vinafor’s profit structure.

Binh Duong Protrade – Import-Export Production Corporation (PRT code) is the Vietnamese partner in the FDI joint venture, which is FrieslandCampina Vietnam Co., Ltd., which is familiar to consumers with brands such as: Dutch Girl, Friso, YoMost, Fristi, Completa…

Protrade owns many golf courses and industrial parks (such as Palm Song Be golf course), but the main profit of the Company comes from FrieslandCampina.

According to the parent company’s audited financial statements, Protrade has earned VND 402.8 billion in loan interest, dividends and distributed profit in 2018 and VND 539.2 billion in 2019.

Shareholders are tired of waiting for restructuring

The main joint venture enterprises such as: VEAM, Vinafor, PV Machino… all have advantages in land and business lines.

For example: PV Machino owns many golden land lots at a beautiful location at 8 Trang Thi, Hoan Kiem district, Hanoi, approximately 2,000 m2 and at Dao Cam Moc, Viet Hung, Dong Anh, Hanoi is 23,600 m2. ..

Moreover, in the area of South An Khanh, Thang Long Boulevard, the enterprise also owns more than 10% in the HH3 project, in Khuong Dinh, Thanh Xuan district is 137m2; at 25 Hung Vuong – Tran Phu – Mong Cai – Quang Ninh streets is 1500m2…

On the other hand, PVMachino also holds 50% of the joint venture “Ham Ca Map” at 7, Dinh Tien Hoang, Hanoi. This is considered a great success of the company in recent years.

However, the main business results shown in revenue, profit from sales and poor service provision made PV Machino’s shareholders at the general meetings question the leadership about the use of financial resources. lot of land and required restructuring the Company, streamlining the apparatus, increasing business efficiency.

Right at the 2020 general meeting, a group of shareholders of PV Machino had harsh opinions about the performance of the Center for International Labor Cooperation and Services.

The cumbersome apparatus, inefficient operation of many departments and divisions, consumed two thirds of the dividends from the joint venture, making the dividends distributed from the joint venture nearly one hundred billion dong per year, but the profit after tax only 1/3 of this number.

Notably, in the last term, PV Machino sold Mong Cai Trade Center but did not announce the selling price and form of sale.

The company also stopped participating in the joint venture in the land lots 1, 3, 5 Dinh Tien Hoang formerly. The company held 50% of the joint venture but did not disclose to shareholders the contents, especially the compensation issue.

PVMachino takes advantage of large revenue from joint ventures with major partners, this is a smart direction to help businesses improve their position.