Vinamilk's stock price declines

Statistics from Nguoi Dua Tin show that since the beginning of the year, VNM shares of Vietnam Dairy Products Joint Stock Company ( Vinamilk ) have fallen by more than 21%, with a 5% drop in market value in the past month alone, reaching 67,000 VND/share (closing price on May 29). Meanwhile, the VN-Index has increased by 1.6% since the beginning of the year and by 3% in the past month.

VNM's share price has not improved much at this time, having fallen from 80,750 VND/share at the beginning of 2022 and hitting a low of 61,300 VND/share in mid-June 2022 before recovering and currently trading at 67,000 VND/share.

Vinamilk's market capitalization is currently VND 141,280.99 billion, placing it 6th in the top 10 companies with the largest market capitalization. In its heyday, VNM was once the stock with the largest market capitalization on the stock exchange.

If the downward trend continues, coupled with the rise of bank stocks, VNM's market capitalization could even be pushed down to 8th place in the near future. Currently, VNM's market capitalization is only slightly more than the three banks ranked after it (TCB, BID, and CTG), less than 12%. This gap could theoretically be closed in a single trading session if VNM experiences a sharp decline and bank stocks surge.

This shows that VNM's position on the Vietnamese stock market has changed significantly compared to the past.

VNM shares have been plummeting since 2021.

According to data from VietstockFinance, foreign investors sold a net 2,772 billion VND on the HoSE in April, the strongest net selling since the beginning of the year. Furthermore, from April 6th to 14th, there was a streak of 7 consecutive net selling sessions by foreign investors, totaling 2,115 billion VND.

Of these, VNM was the second most heavily sold stock by foreign investors on the HoSE exchange, with a net selling value of up to 418 billion VND, continuing the relentless net selling streak since the beginning of 2023.

Currently, Vinamilk's brand value is $2.8 billion, an 18% increase compared to the same period in 2022, ranking second in the top 5 strongest dairy brands globally and sixth in the top 10 most valuable dairy brands in the world .

In 2022, Vinamilk was the only dairy company to be featured in the Foods of Vietnam pavilion at Gulfood Dubai 2022, the world's largest agricultural and food trade fair. Vinamilk also received its sixth prestigious export award.

Looking at the financial picture, in the first quarter of 2023, Vinamilk recorded net revenue of VND 13,918 billion, unchanged compared to the same period last year. In addition, revenue from financial activities increased sharply from VND 320 billion in the first quarter of 2022 to VND 419 billion in the first quarter of 2023, equivalent to a 30% increase.

Conversely, Vinamilk's expenses in the quarter increased significantly compared to the same period last year. Specifically, financial expenses rose by nearly 20% to VND 158 billion, mainly due to a 215% increase in interest expenses compared to Q1/2022.

In addition, Vinamilk spends 2.942 billion VND on sales. This substantial expense includes over 2.202 billion VND for services, promotions, displays, product introductions, and sales support, accounting for 74.8% of the total. This means Vinamilk spends approximately 24.46 billion VND per day on product advertising.

Before tax, Vinamilk achieved a profit of VND 2,312 billion in the first quarter of 2023. After deducting expenses, Vinamilk reported a profit of VND 1,906 billion, a decrease of 16.5% compared to the same period last year.

The company aims for a revenue of VND 63,380 billion in 2023, a 5.5% increase year-on-year, and a pre-tax profit target of VND 10,496 billion, the same as in 2022. By the end of the first quarter of 2023, Vinamilk had achieved 22% of its revenue target and 22% of its pre-tax profit target.

The company stated that it is facing significant competition and challenges in the liquid milk and powdered milk sectors, and therefore the SG&A/revenue ratio for the whole of 2023 will have to remain similar to last year to support sales and regain market share in the remainder of the year. However, some smaller product categories such as plant-based milks recorded positive growth.

Domestic revenue experienced negative growth in Q1/2023 (Source: BVSC).

BVSC Securities projects that in 2023, VNM's net revenue will reach VND 61,061 billion, an increase of 1.8% compared to the same period, and after-tax profit will reach VND 8,985 billion, an increase of 5.5% compared to the same period.

However, the analysis team still believes in the story of gradually recovering profit margins in the second half of 2023 and 2024, and forecasts profit growth of 10.4% in 2024. Projected EPS are VND 3,824 and VND 4,219 per share, respectively, corresponding to P/E ratios of 18.2x and 16.5x for 2023-2024.

KBSV Securities also believes that VNM's domestic market will continue to stagnate due to increasingly fierce competition, making it difficult for VNM to increase its market share; the demand for milk in Vietnam is still not high; and in the short term, consumer purchasing power cannot recover immediately as incomes have been affected after the wave of layoffs at the end of 2022.

The analysis team assesses the outlook for 2024 as more positive, continuing the consumer recovery trend from the end of 2023; demand for dairy products in Vietnam is increasing as per capita milk consumption in Vietnam is still low compared to other countries in the region. For 2024, KBSV expects VNM's net revenue and after-tax profit to reach VND 64,439 billion and VND 9,942 billion respectively, representing increases of 4% and 6.1% compared to 2023 .

Source: https://www.nguoiduatin.vn/da-giam-cua-co-phieu-vinamilk-a610134.html