Ceramic tile producer Royal Invest reveals big ambitions ahead of HCMC bourse listing

Dong Nai-based ceramic tile manufacturer Royal Invest JSC is planning to promote high-end products to gradually replace popular ones with low profit margins, boost exports to the U.S., and develop its retail chain.

The strategy was mentioned in its application to the Ho Chi Minh City Stock Exchange (HoSE) to list 45 million shares under RYG, equivalent to a charter capital of VND450 billion ($17.7 million).

In October 2023, the company successfully conducted an initial public offering (IPO) of 9 million shares at a price of VND15,000 ($0.59) per share, corresponding to a valuation of VND675 billion ($26.5 million).

Royal Invest JSC was founded in the southern province of Dong Nai in September 2009 by a group of friends who shared a passion for tiles, with initial charter capital of VND49.3 billion ($1.94 million under the current exchange rate). Over 15 years, the company has raised its capital by nine times to VND450 billion.

Steering the company is Dinh Viet Anh, also the largest shareholder with 20.8%. Before founding Royal Invest JSC, he was CEO of Y My Ceramics Corporation - a tile brand with over two decades in the market. The company has two other major shareholders, Le Thi Vi Na (19.72%) and Nguyen Thi Le (15.08%).

Viet Anh's relatives are chairpersons of many businesses named Hoang Gia (Royal) with transactions valued at up to tens of billions of VND in 2023. For example, his broker Dinh Quoc Anh is chairman of Royal Green Investment and Production JSC, based in the southern province of Ba Ria-Vung Tau. His wife Huynh Thi Dong Thi is chairwoman of Royal Tiling Materials Technology JSC and Royal Crystal JSC.

Royal Invest JSC's board includes founder and chairman Dinh Viet Anh, independent member Pham Huu Phu, and member and general director Trinh Xuan Hung. Phu is a famous banker, who was once chairman of Sacombank and vice chairman of Eximbank. Meanwhile, Hung once held senior positions at Pepsico Vietnam, Nutifood Nutrition, and Unilever.

Increasing export proportion to 50%, focusing on U.S. market

During 15 years of development, Royal Invest JSC has built two tile factories with five production lines and a combined capacity of 16.5 million square meters per year, producing a variety of products, from popular to high-end. The company has also established a domestic distribution network, including 14 warehouses and more than 3,000 agents.

The company recorded revenue expansion from VND993 billion to VND1,395 billion ($54.79 million) and net profit from VND30 billion to VND101 billion ($3.97 million) from 2020-2023. Net profit margin has also improved year-on-year, from 3% in 2020 to 7.2% in 2023.

From 2024 onwards, the business aims to focus on strategic product lines and high-end products, as well as reduce the proportion of popular products to improve profit margins. To make ends meet, Royal Invest, through its subsidiary – Royal Prosperity Investment and Manufacturing JSC, will invest VND920 billion ($36.14 million) to build a factory with an expected capacity of 3 million cubic meters per year.

According to Dinh Viet Anh, the project is expected to go into trial production on June 27, specializing in producing high-quality products, replacing natural stone and artificial quartz stone panels.

The proportion of export revenue has only reached about 20%, but the company is aiming to increase that to 50% by 2025, focusing on the U.S. market. In addition, the firm will also invest in the Royal Depot retail chain, expanding its network nationwide and internationally. This is expected to increase the company's brand presence and visibility.

This year, the business plans to issue VND150-250 billion ($9.82 million) of private placement bonds to supplement working capital, invest in equipment, and develop the retail chain.

The company paid a share dividend of 78.77% in 2020, but no dividend was paid in 2021 or 2022. In 2023 and 2024, it plans to pay a 10% dividend.

At the end of the first quarter, the firm's total assets stood at VND1.8 trillion ($70.7 million), including VND630 billion ($24.75 million) in receivables and VND450 billion in inventories. It also had a debt of VND688 billion, with a debt-to-equity ratio of 92%.