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Doan Nguyen Duc Bet HAGL on Cattle: Vietnam's Big Herd Experiment

A property and plantation chairman turned a Vietnamese conglomerate into one of the region's largest cattle operators within two years.

Who is Doan Nguyen Duc?

Doan Nguyen Duc is the chairman of Hoang Anh Gia Lai, known as HAGL, a Vietnamese group that began in real estate and moved into plantations in 2008. Tuoi Tre News in November 2015 reported that it planted rubber, sugarcane, palm oil and corn in Laos and Cambodia, holding as of mid-2014 about 44,500 hectares of rubber, 8,000 of sugarcane, 17,300 of oil palm and 5,000 of corn.

Vietnamese media refer to him as Bau Duc. This profile covers only his public business record.

Why did HAGL move into cattle?

HAGL started its cattle investment in early 2015. In the third quarter of 2015, cattle brought in about VND1.4 trillion (US$61.6 million), over 63 percent of that quarter's turnover. For January to September, cattle earnings topped VND2.14 trillion (US$94.16 million), about 41 percent of total revenue.

Duc argued that raising Australian-breed cattle in Vietnam is cheaper than importing finished animals. He said transport adds about 30 percent to the market price, so a $2 per kilogram Australian cow costs about $3.10 per kilogram in Vietnam. About 70 percent of the herd's feed was reported to come from roughly 100,000 hectares owned or leased in Vietnam, Laos and Cambodia.

The Vissan beef launch

On 5 February 2015 in Ho Chi Minh City, Vissan, a subsidiary of Saigon Trading Group, introduced beef from Australian cows raised by HAGL. Vietnam Investment Review's launch story says HAGL imported 18-month-old Australian cows weighing 200 to 250 kg and raised them in Gia Lai, Laos and Cambodia until they reached 500 to 550 kg.

Vissan planned to sell beef from 2,000 HAGL-supplied cows before Tet, at about VND320,000 per kilogram, with an 8,000 per kilogram discount through 25 February. VnEconomy adds that the price sat 8,000 below the market and that its report on the launch quoted Duc saying cattle earned more than HAGL's other ventures, including real estate, rubber and sugar.

The Key to HAGL's Cattle Strategy

Duc's stated reasoning was financial and logistical, and the published numbers show how quickly it scaled. They also show the limits.

These points come directly from the four reports reviewed.

  • He used existing land in Vietnam, Laos and Cambodia to grow feed for the herd.
  • He bought young Australian cattle and finished them locally, avoiding about 30 percent in transport costs on finished animals.
  • He partnered with Vissan for slaughter and sales instead of building a retail brand first.
  • He planned to import breeder cows from Australia and the United States so Vietnam would produce calves by 2017.
  • He set fast scale targets: 100,000 head in 2015 and 200,000 the next year, per the launch story.

Debt, losses and limits

Vietstock, citing VIR, reported that HAGL posted a net loss of VND1.02 trillion for 2016, its first in ten years, on record revenue of VND6.454 trillion. Interest expense rose 44 percent, total liabilities reached VND36.103 trillion and the debt-to-equity ratio was 2.13. Cattle was the largest revenue source at 48 percent of net revenue, but its gross profit fell 54 percent year on year.

All six bondholders extended due dates on about VND12.4 trillion in bonds, pushing repayment to 2021 through 2026. Cattle growth, in other words, happened inside a heavily indebted group, and the beef gamble shared the balance sheet with the rest of the business.

Where it fits in beef history

HAGL's expansion was fast by any measure, from a first investment in early 2015 to a reported herd of about 120,000 head by November. The Vietnamese experiment is a case study in vertical integration, imported genetics and cheap feed land, and also in financing risk. Duc expected the Trans-Pacific Partnership, reached in October 2015, to help his cattle compete with Australian imports.

Readers can follow other large beef operations in the farm.FM ranching section or read a farm.FM story about Vietnam's beef trade.

Timeline

  1. 2008HAGL moves into agriculture, planting rubber, sugarcane, palm oil and corn in Laos and Cambodia
  2. 2014HAGL, Vissan and Nutifood agree a cattle and milk program worth at least VND11 trillion (June)
  3. 2015Cattle investment begins; beef launched with Vissan on 5 February
  4. 2015Herd reported at about 120,000 head in November
  5. 2016Cattle is 48 percent of revenue, but HAGL reports a net loss
  6. 2017Vietstock reports bond maturities pushed to 2021-2026

Frequently asked questions

Who is Doan Nguyen Duc?

He is chairman of Hoang Anh Gia Lai (HAGL), a Vietnamese group that expanded from real estate into plantations and then cattle in 2014-2015.

How many cattle did HAGL have?

Tuoi Tre reported about 120,000 head in November 2015 and a plan to double the herd to 250,000 the following year. Figures are company-reported.

What is HAGL beef?

It is beef from Australian cows raised by HAGL in Gia Lai, Laos and Cambodia and sold through Vissan, which launched the product in Ho Chi Minh City on 5 February 2015.

Did HAGL's cattle business make money?

Cattle was the largest revenue source in 2016 at 48 percent of net revenue, but gross profit from it fell 54 percent and the group posted a net loss.

Sources and further reading

Profiles are compiled from public sources and reviewed against them. See our editorial policy to suggest a correction.

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