Vietnamese dairy producer Hanoimilk is reportedly a target for Tiga Pilar Sejahtera Food, an Indonesian food producer.

The ASEAN company is planning to invest 80 million USD in food producers in Vietnam and Malaysia, quoted Asian-agribiz as saying.

Tiga Pilar is among the largest biscuit producers in Indonesia, has market shares in rice and packed noodles. It also has palm farms. In 2013, sales reached 390.2 million USD and net profit was 33.3 million USD. Its total assets are now 413.1 million USD.

Sjambiri Lioe, Tiga Pilar's finance director, said that negotiations with Hanoimilk will be completed shortly.

Barry Weisblatt, VPBank Securities' Head of Research Department, said that Tiga Pilar hoped to expand its annual profit by 18.8-23.5 million USD by selling Hanoimilk's products in Indonesia.

The company has seen a decline in sales and it has also been short of capital to improve product quality and develop its own cattle farm of 2,000 cows in Me Linh District, worth 380 billion VND (18 million USD).

Last year, Hanoimilk recorded a net income of 222 billion VND, a slight decrease of 5 percent over 2013. However, its net profit share fell by 3 billion VND in 2013 to 161 million VND last year. In addition, the company's earnings per share (EPS) was only 13 VND per share.

Hanoimilk, founded in 2001, used to be one of top three dairy producers in Vietnam. However, it has gone downward due to faulty business strategies and the negative impacts caused by a Melamine incident seven years ago.

The company will have a great opportunity to get access to 10 other countries in the region as the ASEAN Economic Community officially comes into being at the end of this year.

Vietnam's dairy market is becoming hotter as there are many domestic and foreign companies. According to the VOF Investment Fund (VinaCapital), each Vietnamese person consumes an average of 14 litres of milk each year, which is half of the region's average consumption.

Last year, the VOF Fund and Daiwa PI spent 45 million VND to buy 70 percent of stakes in the International Dairy Products (IDP). Thus, IDP targets a growth rate of 50 percent this year and 25 percent for the next three years.

Elsewhere, another domestic player, TH Milk also acquired the Dalat Milk to expand its cattle farm.-VNA