Fluctuations in pangasius prices, and holding on to real estate stocks, the giant Vinh Hoan's profits dropped by 26%.

Vinh Hoan (VHC) reports a decline in profit in the second quarter of 2024.

Vinh Hoan Corporation (stock code VHC) has just announced its consolidated financial report for the second quarter of 2024 with VND 3,196 billion in net revenue, an increase of 17% over the same period.

On the other hand, the company's expenses in the second quarter of 2024 all increased compared to the same period last year. Accordingly, the company's financial expenses reached 57 billion VND, sales and administrative expenses reached 141 billion VND; increased by 15% and 23% respectively.

After deducting expenses, Vinh Hoan reported a profit of VND336 billion, down 26% year-on-year. Explaining this, the company said that the decrease in selling prices of pangasius products was the main reason for the sharp decrease in after-tax profit in the second quarter of 2024.

In the first two quarters of the year, Vinh Hoan recorded a 22% increase in net revenue to VND6,051 billion, but profit only reached VND525 billion, down 23% over the same period last year.

Vinh Hoan reported a profit of VND336 billion, down 26% year-on-year.

Despite revenue growth, Vinh Hoan still reported a decline in profits due to pressure from pangasius prices and a series of additional expenses.

In 2024, Vinh Hoan has two business scenarios. In the low scenario, the company plans to have net revenue of VND10,700 billion, an increase of nearly 7%, while the parent company's profit after tax is expected to decrease by 13% compared to last year to VND800 billion.

In a more positive scenario, Vinh Hoan sets a target of net revenue of VND11,500 billion and profit after tax of parent company shareholders of VND1,000 billion, up 15% and 9% respectively compared to 2023.

Thus, with the low scenario, Vinh Hoan has achieved 61% of the yearly profit plan. In the more positive plan, this pangasius enterprise achieved 48% of the yearly profit target.

At the end of the second quarter, Vinh Hoan's total assets reached VND12,219 billion, a slight increase of 2% compared to the beginning of the year. Inventory decreased by 9% to VND3,417 billion, accounting for 28% of total assets.

Vinh Hoan's total debt at the end of the period was nearly VND2,410 billion, up 6.7% compared to the beginning of the year. Of which, the increase mainly came from short-term loans, reaching VND2,342.6 billion, up 8.5%. The main reason was the sharp increase in loans at HSBC Vietnam to VND495 billion and VND318 billion at United Overseas Bank (Vietnam) Limited.

Profits decrease due to "holding" risky real estate stocks?

In a recent report on the seafood industry, KB Securities Vietnam (KBSV) stated that recently, seafood export output has had a positive recovery, but export prices have not improved. Therefore, some businesses have had strong revenue growth but profits have not increased accordingly.

According to Vietnam Customs, in June 2024, pangasius export turnover reached nearly 172 million USD, up 20% over the same period last year. Cumulative pangasius export turnover in the first 6 months of this year reached 918 million USD, up 5% over the first 6 months of 2023.

Although the profit in the first half of this year has not met expectations, according to the assessment of a number of financial institutions, Vinh Hoan Seafood's business results are still expected to recover more clearly in the second half of this year, especially when the US market is recording a series of positive signals.

In the two main export markets of the US and Europe, Vietnamese pangasius is an advantageous product as the US has banned the import of seafood originating from Russia and reduced the anti-dumping tax on Vietnamese pangasius; Europe has increased the tax applied to pollock fillet (a substitute product of pangasius fillet) from 0% to 13.7%. Thereby, creating an advantage for Vietnamese pangasius when exporting to these markets.

Currently, the demand for pangasius in the US market, a key market of Vinh Hoan Seafood, is assessed by many financial institutions to gradually increase again in the remaining two quarters of this year.

According to Tien Phong Securities, in addition to recovering demand, the driving force for increasing export prices of tra fish also comes from the shortage of raw fish supply at the end of the year.

Sharing the same view with Tien Phong Securities, Phu Hung Securities currently forecasts that Vinh Hoan Seafood's net revenue this year will increase by 13.8% compared to 2023, reaching VND11,426 billion, and net profit will increase by 17.6%, reaching VND1,117 billion.

Currently, the demand for pangasius in the US market, a key market of Vinh Hoan Seafood, is assessed by many financial institutions to gradually increase again in the remaining two quarters of this year.

Specifically, after 2023, focusing on clearing inventories, the inventory/sales ratio of the US food and beverage industry is lower than the average of the years before 2020. This will boost the demand for US food imports in the last months of this year, promoting growth in both output and selling prices for export markets to the US.

Regarding the selling price of pangasius, the average market price in the first quarter of 2024 has shown a recovery trend. According to Rong Viet Securities (VDSC), the selling price of pangasius in the third quarter of 2024 is forecast to increase by more than 5% before remaining flat in the fourth quarter of 2024.

Meanwhile, the price of raw pangasius is still on a downward trend due to the decrease in the price of fingerlings and the low demand for raw fish from companies. These factors will help pangasius processing and exporting enterprises such as Vinh Hoan Seafood to improve their gross profit margins.

It is known that Vinh Hoan currently invests 161.6 billion VND in securities, however, all 3 stocks DXS, NLG and KBC in the portfolio have not yet made a profit when the total provision is 31.4 billion VND, equivalent to a temporary loss of 19% of the total investment portfolio. The DXS investment alone has an original cost of more than 60 billion VND and is estimated to have the heaviest loss of 27 billion VND...

Many investors commented that VHC's core business is very good, but its self-trading is not good. The company currently "holding" all real estate codes means it must accept facing difficulties and losses.

In addition to business results, previously, in the 2024 Annual General Meeting of Shareholders, regarding the investment plan, in 2024, Vinh Hoan plans to invest 930 billion VND. In particular, the Company will invest in expanding and upgrading the Collagen production capacity and renovating the factory at Vinh Hoan Collagen; invest in a cultivation project, invest in warehouses and invest in additional machinery and equipment for phase 1 of Thanh Ngoc fruit processing factory; invest in expanding warehouses and upgrading the production capacity of Feedone aquatic feed factory; invest in expanding warehouses and upgrading the production capacity of Sa Giang factory; investments in expanding farming areas; and new investments and renovation of Vinh Phuoc, Thanh Binh, Vinh Hoan factories.

Source: https://danviet.vn/bien-dong-tu-gia-ca-tra-lai-om-them-ma-chung-khoan-bat-dong-san-dai-gia-vinh-hoan-sut-giam-26-loi-nhuan-20240729155011631.htm