Vinamilk (VNM): 2 key projects are about to come into operation, expected to pay additional dividends in 2023

Vinamilk , the Vietnam Dairy Products Joint Stock Company, has just announced that two key projects with investments worth trillions of VND are expected to become operational soon. At the same time, the dairy company plans to distribute additional cash dividends for 2023 .

Vinamilk aims for a 4% increase in net profit this year compared to 2023.

Vinamilk Joint Stock Company (stock code VNM - HoSE) has just announced the documents for its 2024 Annual General Meeting of Shareholders, scheduled to be held on April 25th. This year, the dairy company plans to achieve revenue of VND 63,163 billion and after-tax profit of VND 9,376 billion, representing increases of 4.4% and 4% respectively compared to 2023. Notably, regarding the profit distribution plan, Vinamilk's Board of Directors plans to propose to shareholders the approval of a final dividend payment for 2023 at a rate of up to 9.5%, meaning shareholders owning one share will receive VND 950 in dividends. This dividend payment is expected to be made this year. Previously, Vinamilk had already paid interim dividends to shareholders in two installments. Specifically, the first dividend payment took place in October 2023 at a rate of 15%; the second in February 2024 at a rate of 5%. The third dividend payment at a rate of 9% is expected to be made in April 2024. Thus, if the plan to distribute an additional fourth dividend is approved, Vinamilk will complete its 2023 profit distribution plan with a total rate of 38.5%. Sharing more information about this year's business strategy, Ms. Mai Kieu Lien - General Director of Vinamilk said: “Entering 2024, with the expectation that the macroeconomic situation will improve, we expect Vinamilk's revenue and profit to continue to grow. Our priority is to continue recovering market share and sales in a sustainable and profitable manner.” According to assessments from many financial institutions, the continued low price of raw milk powder, with a significant expected decrease this year, is positively supporting Vinamilk's business results. In early February, Mr. Le Thanh Liem, Vinamilk's Chief Financial Officer, stated that the Q1 2024 business results would be "much better" than the same period in 2023, and the company had already finalized raw material prices for production until the end of the first half of 2024. Two key projects are expected to be operational this year.

Vinamilk is spending between 1,500 and 2,000 billion VND per year to invest in upgrading and expanding production.

From now until 2026, Vinamilk will continue to focus on implementing key projects to strengthen its business capacity in the medium and long term. Specifically, for the Vinabeef Tam Dao beef farming and processing project in Vinh Phuc province, Vinamilk and its subsidiary - Vietnam Livestock Corporation (Vilico) - have collaborated with Sojitz Group (Japan) to invest in a modern, closed-loop farming and processing system on an area of 75.6 hectares. The project includes two main sections: a beef cattle farm with a capacity of 10,000 head and a chilled beef processing plant with a capacity of 30,000 beef cattle per year, equivalent to 10,000 tons of product per year, supplying the national market and for export. The scale of cooperation in all phases is expected to reach US$500 million (equivalent to nearly VND 12,500 billion). Phase 1 of the project, with an investment of nearly 3,000 billion VND, is expected to become operational this year.

VNM Vinamilk share price — Price and trading volume movements of Vinamilk's VNM stock from the beginning of 2023 to the present. (Source: TradingView)

For the Moc Chau Dairy Paradise Complex Project in Son La province, Vinamilk, together with its subsidiary - Moc Chau Dairy Cattle Breeding Joint Stock Company (Moc Chau Milk), is implementing a complex project with a total investment of up to VND 3,150 billion. This project includes a high-tech dairy farm with a capacity of 4,000 cows combined with eco-tourism and a high-tech Moc Chau milk processing plant with a capacity of 500 tons of milk/day (Phase 1). The project commenced in 2022 and is expected to be operational in 2024. Regarding the Lao-Jagro Dairy Farm Complex Project in Xieng Khuang province, Laos, implemented by a joint venture of Vinamilk (holding 51% of the shares), Phase 1 will have a scale of 8,000 cows, including 4,000 organic dairy cows. The project has been operational since 2022, producing up to 44,000 tons of milk per year. Phase 1 of the project was implemented on an area of 1,000 hectares with a total investment of $120 million. The project has also completed Organic certification for over 600 hectares according to EU/NOP standards (Europe and the US). Phase 2 of the project is expected to expand the farm to 15,000-20,000 hectares with a livestock scale of 100,000 cows. The total investment in both phases will reach $500 million. In addition, Vinamilk is accelerating the expansion of its production capacity. Currently, the company is spending between VND 1,500 and VND 2,000 billion annually on upgrading production. In 2024, Vinamilk plans to hire consultants to improve its marketing activities for infant formula, restructure its distribution channels to focus more on hospitals and modern retail channels, with the goal of regaining an additional 1% market share in this segment.

Manh Hung

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