Great opportunity, seafood giants still plummet

Profits plummet

Vinh Hoan Corporation (VHC) has just announced its consolidated financial report for the third quarter of 2023 with after-tax profit decreasing by more than 56% compared to the same period last year to VND 200 billion. Accumulated profit for 9 months decreased by 56% to VND 883 billion.

Previously, Vinh Hoan Seafood of Ms. Truong Thi Le Khanh requested an extension to submit the third quarter financial report because the company had to receive an inspection delegation from the US Department of Commerce at the end of October for the 19th administrative inspection of frozen pangasius fillets exported from Vietnam to the US market. However, the authorities rejected the request for an extension.

In the third quarter, many seafood businesses reported plummeting profits, contrary to many investors' expectations of a strong export growth scenario to the US, as the country entered its peak consumption season, and retail groups recorded a decrease in inventories. Vietnam and the US have just upgraded their comprehensive strategic partnership...

IDI Multinational Investment and Development Corporation (IDI) reported a 77% year-on-year decrease in after-tax profit in the third quarter of 2023 to VND23 billion and a 15% decrease compared to the previous quarter. Revenue decreased by 11% year-on-year to VND1,749 billion.

IDI's gross profit margin fell sharply to 6% in the third quarter, compared to 11% in the same period last year and 8% in the previous quarter. IDI still has a large interest expense in the context of bank interest rates remaining at high levels.

Ca Mau Seafood Processing and Import-Export Joint Stock Company - Camimex (CMX) recorded a 74% decrease in after-tax profit, to only VND8.8 billion in the third quarter due to a 34% decrease in net revenue to VND538 billion. Nam Viet Joint Stock Company (ANV), meanwhile, reported a 99% plunge in profit from VND120 billion in the same period to VND1 billion. Net revenue decreased by 11% to VND1,099 billion.

Seafood exports of Vietnamese enterprises to the US, China and Japan remain impressive.

Minh Phu Seafood (MPC) even lost 26 billion VND in the third quarter, compared to a profit of 332 billion VND in the same period last year. Net revenue decreased 41% to below 3,000 billion VND.

According to data from the Vietnam Association of Seafood Exporters and Producers (VASEP), pangasius export turnover in the first 9 months of this year decreased by 30.7%. In the whole seafood industry, export turnover in the first 9 months decreased by 22%.

Previously, many investors and experts expected seafood businesses to have positive business results in the last two quarters of the year, with forecasts that exports would increase as demand in some countries recovered and the market entered the "golden season" at the end of the year.

Exports to the US are also expected to be positive when the Vietnam-US relationship is upgraded to a comprehensive strategic partnership. China will boost imports of Vietnamese seafood…

Therefore, the group of seafood stocks has quite high expectations. However, many stocks in this industry group have decreased sharply in the past 2 months. MPC shares decreased from 20,000 VND to 17,000 VND/share. Vinh Hoan Seafood decreased from over 80,000 VND/share to the current level of 70,000 VND/share...

Positive signals from the number 1 market

In an explanatory report, General Director of Vinh Hoan Seafood Nguyen Ngo Vi Tam said that the reason the company's profit in the third quarter decreased sharply was due to a decrease in output and selling prices.

In fact, in the third quarter, Vinh Hoan recorded a revenue decrease of more than 19% compared to the same period last year to VND2,700 billion. In the first 9 months, revenue decreased by 30% to VND7,680 billion. While revenue decreased sharply, cost of goods sold remained high. Revenue decreased despite recent positive signs in exports to China and Europe.

In its October business results report, Vinh Hoan said its exports to the US fell 59% compared to the same period last year. Meanwhile, domestic consumption fell 14%.

However, the company recorded a 43% increase in exports to China in October and a 20% increase in exports to Europe.

Regarding Minh Phu Seafood, explaining the loss in the third quarter, the company of the husband and wife "shrimp king" Le Van Quang and Chu Thi Binh said it was due to a decrease in revenue. In the first 9 months, Minh Phu Seafood recorded net revenue of 7,466 billion VND, down 46% compared to the same period last year.

Seafood exports to the US. (Source: Vasep)

Another problem that seafood businesses are facing is the shortage of raw materials. This is a factor that limits businesses like MPC from signing new orders.

This is a rather disappointing result as in recent years the US has always held the number 1 position in terms of shrimp import value from Vietnam, worth billions of USD/year. Expectations for growth in seafood exports to the US are very high.

In fact, shrimp export growth to the US has increased sharply since the US and Vietnam established a comprehensive partnership in 2013. The recent upgrading of the relationship between Vietnam and the US to a comprehensive strategic partnership is considered a boost for the export of Vietnamese goods to the world's largest economy .

Moreover, recently, US inflation has cooled down and the inventories of US retail corporations in the post-Covid period have also decreased sharply. Many people expect that exports to the US, including seafood, will increase.

Although seafood exports to the US have not improved in the first 9 months of the year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP), there have been positive signs in September and October.

In the first 9 months, exports to the top 3 largest markets, the US, China and Japan, all exceeded the 1 billion USD mark. Of which, the US still holds the No. 1 position with nearly 1.2 billion USD, 33% lower than the same period in 2022.

In September alone, seafood exports to the US, China, and EU all recovered, increasing by 4-17% over the same period in 2022.

According to VASEP, the market is showing signs of improvement, especially in the fourth quarter.

Orders from foreign retailers typically increase at the end of the year due to holiday demand. The world’s No. 1 economy is showing signs of emerging from recession and recovering.

Meanwhile, China is assessed to have great potential for Vietnamese seafood. In 2022, Vietnam's seafood exports to China will reach 1.6 billion USD, an increase of 66%.

Developing sustainable fisheries, the EU wants Vietnam to become a world model . The EU wants to support Vietnam to become a world model in developing sustainable fisheries and combating IUU fishing.

Source: https://vietnamnet.vn/co-hoi-lon-cac-dai-gia-thuy-san-van-lao-doc-2216190.html