COLAVI winning massive bids for exclusive conveyor technology

Vietnam Mechanical and Machinery Erection Joint Stock Company (COLAVI JSC) was established in 2003, formerly known as Yen Tho Mechanical JSC, operating mainly in mechanical processing, metal treatment and coating industry.

COLAVI specializes in implementing EPC, EP, PC, BOO projects for ore recruitment and mineral conveyor production while manufacturing non-standard steel structures, installing machines to meet civil needs and heavy industries such as electricity production, building materials, and steel rolling.

Source: VIRAC General

Over 17 years of expansion, the company is in charge of executing numerous mineral transport routes serving northern thermal power plants, most of which operate in Quang Ninh province. Some of the business’s main partners are Vietnam national Coal – Minerals Vinacomin Group, Hoa Sen Group, and Vietnam Steel Corporation VNSteel.

Evaluation of the company’s financial performance

Revenue of COLAVI in the period of 2016 – 2019 witnessed significant fluctuations; specifically, in 2017, the company’s net revenue peaked at 1.118 billion, then fell sharply to 34% at the end of 2018, bringing the business’s growth index down. By 2019, the revenue was approximately the same period last year, plus growing profit induced a more favorable situation for the business.

2017 was the year COLAVI held an enormous amount of assets, but equity accounted for only about 43% of its total capital. The rest of the business has to bear a trillion VND debt, mostly from short-term financial loans.

Source: VIRAC

In 2019, the company profit flow went up through the previous decline period, net profit reached VND 131 billion, up 296% over the same period of 2018. Total revenue in 2019 decreased only slightly compared to last year, raising the growth index to 30%, along with the ROA and ROE rate simultaneously in the range of 12 – 15%.

Source: VIRAC

Source: VIRAC

Total investment in 2019 reached VND 1,123 billion, accounting for 75% is the owner’s capital contribution; the remaining liability was VND 280 billion, which decreased sharply compared to the same period last year 2018. Notably, although COLAVI holds a minimum asset volume, in 2019, the company has the most comprehensive equity sources compared to the previous period, along with strong profit growth, which has gradually reinforced business development.

This year, COLAVI- VIMCC – VMC joint venture won a package worth VND 368 billion in Vinacomin’s Khe Cham coal plant construction project, in which Vietnamese mechanical and machinery enterprises undertake 74% of the workload of the procurement.

Vinacomin continuously pours hundreds of billions into COLAVI’s transportation technology

In the past four years, COLAVI has collected six packages worth VND 292 billion from Vinacomin, a Vietnam National Coal – Mineral Corporation subsidiary.

Specifically, in early March this year, COLAVI enterprises won the EPC package worth VND 93 billion to design, construct, and supply technological innovation at Dien Cong port (Quang Ninh). The package was implemented in 120 days, with the winning price reduced by VND 381 million, achieving a saving rate of 0.4%.

Previously, TKV Group continuously funded COLAVI in modernizing the consumption warehouse at Dien Cong port. In December 2016, as a joint member, COLAVI won the bidder for the 35kV power line project in Uong Bi – Dien Cong port, with the winning bid price of VND 48.68 billion. In addition to this month, COLAVI won the construction worth VND 43.29 billion of Khe Ngat closed coal warehouse, which belonged to the first phase of building a coal transport system from Khe Ngat warehouse to Dien Cong port. 

By the beginning of 2017, COLAVI continued to advance the Dien Cong port with an EPC package worth more than VND 63 billion; the company was in charge of constructing and installing equipment for conveyor lines 4001 and 4002. COLAVI’s conveyor lines include a 3D winding tube conveyor, suitable for complex terrain and great transport productivity.

Scared materials by COVID cause mechanical enterprises to plunge.

According to the Association of Mechanical Enterprises report, the Vietnam mechanical industry only satisfies about 32% of domestic mechanical demand, including most raw materials to be imported from Asian countries. The majority of domestic companies are only assembling inferior products, therefore limited their capacity compared to other FDI enterprises.

Between 2019 and 2030, Vietnam’s mechanical total market could reach USD 310 billion, of which industrial projects account for one-third of the output, creating promising opportunities for the following supporting industry to flourish. However, in reality, domestic supporting enterprises can only produce low technology content products, plus raw materials such as iron and steel are contributed mostly from foreign markets. In the first nine months of 2020, the iron imports portion decreased 4% by volume and 15.9% by turnover, mostly due to restrictions from main import markets such as China, Japan, and Korea. Limited sources of materials have heavily declined domestic mechanical production and construction.

Opportunities for COLAVI JSC

The mining industry is turning towards green mining technology

Despite the market downward trend in the first half of 2020, the coal industry is growing positively, especially since the TKV coal mining group maintains a high and stable production rate. In eight months of 2020, TKV’s units produced 28 million tons of original coal, for which, on average, one employee will receive 12.7 million each month.

Besides increasing in quantity, Vietnam is heading towards a sustainable mining industry, where eco-friendly solutions are esteemed. TKV Group, a COLAVI golden partner, spends nearly VND 1,000 billion per year on environmental protection costs and has replaced transport by car with a series of specialized conveyor and rail projects. Vietnam Mechanical and Machinery Erection Company will be highly advantaged by this trend, especially when mastering the technology of goods conveyor transporting – the method is favorable because of high economic efficiency and environmental emissions reduction.

COLAVI invests in building the first Northern LNG power plant

In nearly ten years, the country’s electricity output has risen more than 2.3 times, from 101.4 billion kWh in 2010 to almost 235 billion kWh in 2019; by 2045, Vietnam’s electricity output will continue to proliferate at an average rate of 5.6% per year. In particular, fossil fuel sources (coal and gas) account for the most proportion, putting severe pressure on natural resources and inducing climate change. Therefore, the government aims to increase the electricity output produced from renewable sources for a healthier environment.

Signed in October 2020, the LNG power plant joint venture with Japan is this year’s turning-point for Vietnam’s renewable power progress; the four investors COLAVI, PV Powers, Tokyo Gas Group, and Marubeni Group would form a complex of intense, professional investors that can fully coordinate the scheme. This first Northern imported LNG power plant will be located in Cam Pha city, Quang Ninh province, with a prediction capacity of 1,500MW. Also, the Japanese government is considered offering funds to reduce pressure on the parties involved. This is a great opportunity for domestic manufacturer to advance production process matching international standards.

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