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 Q2/2024.

Vinh Hoan Joint Stock Company (stock code VHC) has just announced its consolidated financial report for the second quarter of 2024 with net revenue of VND 3,196 billion, an increase of 17% compared to the same period last year.

Conversely, the company's expenses in the second quarter of 2024 increased compared to the same period of the previous year. Specifically, the company's financial expenses reached VND 57 billion, and selling and administrative expenses reached VND 141 billion; increases of 15% and 23% respectively.

After deducting expenses, Vinh Hoan reported a profit of 336 billion VND, a decrease of 26% compared to the same period last year. Explaining this, the company stated that the decrease in selling prices of pangasius products was the main reason for the sharp decline in after-tax profit in the second quarter of 2024.

Combining the first two quarters of the year, Vinh Hoan recorded a 22% increase in net revenue to VND 6,051 billion, but profit only reached VND 525 billion, a 23% decrease compared to the same period last year.

Vinh Hoan reported a profit of 336 billion VND, a decrease of 26% compared to the same period last year.

Despite revenue growth, Vinh Hoan reported a decline in profit due to pressure from pangasius fish prices and a series of incurred expenses.

In 2024, Vinh Hoan developed two business scenarios. In the low-scenario, the company projected net revenue of VND 10,700 billion, an increase of nearly 7%, while after-tax profit attributable to parent company shareholders was expected to decrease by 13% compared to last year, to VND 800 billion.

In a more optimistic scenario, Vinh Hoan sets a target of VND 11,500 billion in net revenue and VND 1,000 billion in after-tax profit attributable to parent company shareholders, representing increases of 15% and 9% respectively compared to 2023.

Thus, under the low-scenario plan, Vinh Hoan has achieved 61% of its annual profit target. Under the more optimistic scenario, this pangasius company has reached 48% of its annual profit target.

At the end of the second quarter, Vinh Hoan's total assets reached VND 12,219 billion, a slight increase of 2% compared to the beginning of the year. Inventory decreased by 9% to VND 3,417 billion, accounting for 28% of total assets.

Vinh Hoan's total outstanding debt at the end of the period was nearly VND 2,410 billion, an increase of 6.7% compared to the beginning of the year. The increase was mainly due to short-term debt, reaching VND 2,342.6 billion, an increase of 8.5%. This was primarily caused by a significant increase in loans from HSBC Vietnam to VND 495 billion and VND 318 billion from United Overseas Bank (Vietnam) Limited.

Profits decline due to holding onto risky real estate stocks?

In a recent report on the seafood industry, KB Securities Vietnam (KBSV) stated that while seafood export volume has recovered positively recently, export prices have not improved. Therefore, some businesses, despite strong revenue growth, have not seen corresponding profit growth.

According to data from Vietnam Customs, in June 2024, pangasius export turnover reached nearly 172 million USD, an increase of 20% compared to the same period last year. Cumulative pangasius exports in the first six months of this year reached 918 million USD, an increase of 5% compared to the first six months of 2023.

Although profits in the first half of this year did not meet expectations, according to assessments from several financial institutions, Vinh Hoan Seafood's business results are still expected to recover significantly in the second half of this year, especially as the US market is showing a series of positive signals.

In the two main export markets, the US and Europe, Vietnamese pangasius is currently in a competitive position. This is due to the US implementing a ban on imports of seafood originating from Russia and reducing anti-dumping duties on Vietnamese pangasius; Europe has increased the tax applied to pollock fillets (a substitute for pangasius fillets) from 0% to 13.7%. This creates an advantage for Vietnamese pangasius when exporting to these markets.

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

According to an assessment by Tien Phong Securities, in addition to recovering demand, the upward trend in export prices for pangasius also stems from a shortage of raw fish supply towards the end of the year.

In line with Tien Phong Securities, Phu Hung Securities currently projects that Vinh Hoan Seafood's net revenue for the whole year will increase by 13.8% compared to 2023, reaching VND 11,426 billion, and net profit will increase by 17.6%, reaching VND 1,117 billion.

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

Specifically, following the focus on clearing inventory after 2023, the inventory-to-sales ratio of the US food and beverage industry is lower than the average of the years before 2020. This will boost demand for US food imports in the final months of this year, driving growth in both volume and selling prices for export markets to the US.

Regarding pangasius fish prices, the average market price in early Q3 2024 showed a recovery trend. According to Rong Viet Securities (VDSC), pangasius fish prices in Q3 2024 are forecast to increase by more than 5% before stabilizing in Q4 2024.

Meanwhile, the price of raw pangasius continues to decline due to falling prices of fingerlings and low demand from companies. These factors will support pangasius processing and exporting businesses like Vinh Hoan Seafood in improving their gross profit margins.

Reportedly, Vinh Hoan currently has 161.6 billion VND invested in securities; however, all three stocks in its portfolio – DXS, NLG, and KBC – have not yet generated profits, with a total provision of 31.4 billion VND, representing a temporary loss of 19% of the total investment portfolio. The DXS investment alone has an original cost of over 60 billion VND and is estimated to have the heaviest loss of 27 billion VND...

Many investors have commented that while VHC's core business is doing very well, its proprietary trading seems to be struggling. The company, currently holding only real estate stocks, must accept the prospect of difficulties and losses.

Besides business results, at the 2024 Annual General Meeting of Shareholders, regarding investment plans, Vinh Hoan projected an investment of VND 930 billion in 2024. This includes investments in expanding and upgrading the production capacity of Collagen and renovating the Vinh Hoan Collagen factory; investing in a cultivation project, warehouse investment, and additional machinery and equipment for phase 1 of the Thanh Ngoc fruit processing plant; expanding the warehouse and upgrading the production capacity of the Feedone aquatic feed factory; expanding the warehouse and upgrading the production capacity of the Sa Giang factory; investments in expanding farming areas; and new investments and renovations of the Vinh Phuoc, Thanh Binh, and 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