Pangasius companies continued to generate large profits in the first quarter

The first quarter of 2019 continued to receive good news from many pangasius businesses. Many companies announced profit increase several times over the same period last year thanks to the general advantage of the whole industry.

For VINH HOAN CORP (HoSE: VHC), the company recorded profit after tax over VND 307 billion in the first quarter, 3 times higher than the same period in 2018. This result of Vinh Hoan thanks to higher selling prices year on year, increasing gross profit margin from 14% to 24%.

In 2018, Vinh Hoan set a profit record of VND 1,442 billion. The company still maintained and developed in major markets. The export rate to the US, a market with very high profit margins of Vinh Hoan, increased from 40% to 50% in 2018. In addition, Vietnam's leading pangasius business was also the third largest supplier to China with a market share of 9%, concentrating in the high-end segment. 

In 2019, Vinh Hoan continued to benefit from large markets when the company still enjoyed the 0% tax rate in the US. Along with that, the seafood tax in the EU market will reduce from 5.5% to 0% according to the 3-year roadmap. This will be a favorable condition for Vinh Hoan to increase its export to this market (exports to EU in first quarter increased by 40%). 

Nam Viet Corporation (HoSE: ANV) is rising strongly after aggressively divesting outside the industry and investing in pangasius. After recording a record profit of 600 billion in 2018, Nam Viet continued to announce profit of over 200 billion dong in QI, up by 136% thanks to the growth from existing markets and low input material costs.

Notably, the company's gross profit margin improved sharply from 17% in Q1/2018 to 30.5% in Q1/2019. Profit after tax margin also rose from 9.3% to 22%.

Growth in export turnover of Nam Viet was thanks to strong growth from the European market (up 90%) and ASEAN countries (up 24%). These were also the two largest markets, accounting for nearly 40% of total exports in the first quarter in 2019.

In terms of scale and market share, Cuu Long Fish Corporation (HoSE: ACL) was smaller than VHC and ANV. However, the corporation also achieved high business efficiency. In 2018, ACL recorded a record profit after tax of VND 230 billion, 11 times higher than that of 2017.

In the first quarter of this year, the company's revenue increased by 34% to VND 445 billion. Profit after tax was over 54 billion dong, 9 times higher than the same period in 2018. High gross profit margin as well as the less volatile cost were the main factors helping the company achieve this result.

This pangasius business has shifted its sales structure to many different segments in many markets. The company was officially a supplier to Walmart supermarket, gaining a large market share in many traditional markets such as South America, Middle East, ... and penetrating deeply into Asian markets (sales in China increased by 27% in 2018).

Aquatex Bentre (HoSE: ABT) also recorded gross profit margin increased to 20% in the first quarter, whereby the company reported profit of over VND 11 billion, up 24% over the same period in 2018. In 2018, the company's profit hit nearly 67 billion, up 135% compared to 2017.

The member company of The PAN Group did not export pangasius to the US, they concentrated on Japanese and European markets as these were sustainable markets and had a better profit margin. Business's leaders aim to develop a closed cycle (including breeding, farming and processing pangasius) to produce high quality products for consumption in fastidious markets. The company advocates competition by quality, not competing by price.

Some other businesses also had positive results in the first quarter. Camimex Group (HoSE: CMX) reported a profit of 24 billion dong, 6 times higher than that of 2018 thanks to an increased 24% of gross profit margin and revenue from sudden liquidation of assets. Hung Vuong (HoSE: HVG) also unexpectedly reported a profit of 6 billion dong in the first quarter (January 1-March 31) while the same period still saw a loss of 387 billion dong.

Pangasius exports in the first quarter rose by 7.8%

Vietnam Association of Seafood Exporters and Producers (VASEP) announced that by the end of March, the total value of Vietnamese pangasius exports reached US$472.2 million, up 7.8% over the same period in 2018. The four largest importers were China - Hong Kong, EU, US and ASEAN respectively.

By the end of March, pangasius exports to ASEAN reached US$55.17 million, up 18% compared to the same period last year. Export value to Thailand, the Philippines and Malaysia climbed by 6.5% 40.6% and 70.9% respectively.

Currently, taxes on frozen pangasius products are at 0% according to ASEAN (ATIGA); ASEAN - China (ACFTA) and ASEAN - Korea (AKFTA).

According to a report of RongViet Securities Corporation (VDSC), the EU market has increased strongly by 76% in the first quarter thanks to greater demand for seafood and the impact of Brexit event. VDSC identifies that the prospect of pangasius exports in this market in the coming time maintains an upward trend. However, this trend is no longer as strong as in the first quarter as Brexit deadline has been moved to October 31.

The US market dropped 5% in the first quarter due to high inventories from the end of 2018. At present, the US plans to raise taxes up to 25% with Chinese seafood products. In addition, the POR14 results were not as expected but still lower than POR13. Based on this forecast, VDSC believe that the US will achieve positive growth in time to come.

The Chinese - Hong Kong market fell for the first time by 2% in the first quarter due to a 13% drop in March. The market movements in the coming time will depend on whether the US will impose a 25% tax on Chinese tilapia products or not. Accordingly, Vietnamese pangasius may compete fiercely with China's domestic tilapia.