By Son Nghia - The Saigon Times Daily

HCMC – Saigon Paper Corporation (SGP) has bought back a 33.81% stake held by Daio Paper Corporation, one of the two Japanese shareholders in the local paper firm.

The Bridgehead Investment Fund under Development Bank of Japan is now the only Japanese shareholder in Saigon Paper with a 14.49% stake.

Speaking to the Daily last week, SGP general director Cao Tien Vi said Daio had withdrawn from SGP because of its ownership change. Therefore, Daio also changed its investment strategy and shifted its resources from the Vietnamese market back to Japan for consolidation, he added.

Cooperation between SGP and Daio had been good since the latter bought SGP shares in April 2011. Daio was a big, professional and responsible partner, and the pullout was unexpected, according to Vi.

SGP is currently conducting procedures to increase equity to around VND1 trillion.

After the firm’s charter capital is increased, the chairman of SGP, Mai Huu Tin, will hold a stake of 42.3%, equivalent to VND416 billion. Meanwhile, Vi as general director of SGP, investment funds Bridgehead and BVIM and other shareholders own 57.7%, or nearly VND570 billion.

Vi said SGP’s pre-tax profit in January-July rose by nearly VND60 billion year-on-year despite inventory-triggered difficulties faced by the paper industry. SGP will mobilize more capital to invest in a paper line which will have a capacity of 28,000 tons per year to make better use of its existing facilities and increase paper capacity to 74,440 tons a year.

The firm’s revenue is expected to reach VND4.5 trillion in 2015 and double to VND10 trillion in 2020 when its two plants run at full capacity.

Statistics of the Vietnam Pulp and Paper Association show local paper consumption in the year’s first half dropped sharply, with coated paper declining 34.5%, newsprint 29% and tissue 18%.

The first six months saw many paper mills suspending or ceasing operation and even a paper craft village almost grinding to a halt. Such entities were mainly small with annual capacity of less than 10,000 tons and were using outdated and energy-consuming machinery.