The Board of Directors (BoD) of Hoang Anh Gia Lai Agricultural JSC (HAGL Agrico, HNG on HSX) announced Resolution No.1706/19/NQ-HDQT HAGL Agrico about transferring 100 per cent of ownership ratio at Indochina Rubber Investment and Development Co.,Ltd. for Thadi Indochina Agriculture Processing & Distribution JSC.
As of March 31, 2019, Indochina Rubber Investment and Development Co., Ltd. had a charter capital of VND1.65 trillion ($71.74 million) and was fully owned by HAGL Agrico which bought it on March 3, 2016 from Cuong Thinh Rubber Investment Co., Ltd. and An Thinh Rubber Investment Co., Ltd. for VND1.65 trillion ($71.74 million). At that time, Indochina had a charter capital of VND1.465 trillion. The transferee will be Thadi Indochina Agriculture Processing & Distribution JSC (Thadi). This is a subsidiary of Thaco that was established on March 18, 2019 and operates in the field of production and investment in Thaco's agro-forestry activities, including research and development, sample farms and experimental sample farms, production of organic and biological agricultural materials, fruit processing, and distributing premium fruit products to foreign markets.
In August 2018, Thaco signed a strategic co-operation deal with HAGL and HNG under which it acquired 35 per cent of HNG's shares. In recent years, Thaco has invested more than VND10.5 trillion ($456.52 million) to help HNG restructure its debts and convert a part of the rubber and palm oil area to fruit trees, farm planning, and application of synchronised mechanisation solutions.
Thaco and HAGL also signed an appendix of co-operation contracts to adjust some terms for strategic co-operation for fruit crops in the coming time.
Specifically, Thadi is HNG's strategic partner distributing export fruits for high-end markets, fruit consumption for processing, cold storage services, port transportation services, and import and export for HNG.
Thadi also signed a strategic co-operation contract with HNG in transporting, preserving, processing, and exporting agricultural products.
Thedeal between HAGL and Thadi took place in the context of rubber prices continuously breaking records. In detail, since the end of 2018, the price of rubber tends to increase, an eight-month peak at $2.19 per kilogramme, up 27 per cent from the beginning of 2019.
The reasons behind the increasing natural rubber prices include a 35 per cent rise in the price of oil in the first few months of the year, after some key rubber producing countries curbed production, and adverse weather affected rubber production and storage, especially tropical storms in Thailand, and an early winter in some Southeast Asian countries, as well as the droughts in Yunnan province (China).
In the 2018 annual report, in the rubber segment, HAGL has been maintaining and caring for 47,122 hectares of rubber, 20,361 hectares of which are in Laos, 4,972ha in Vietnam and 21,789 hectares are in Cambodia.
HAGL operates a rubber latex processing factory with a capacity of 25,000 tonnes a year in Laos. It is expected that by 2022, the whole rubber area will be put into operation if the price of rubber latex recovers.