Sao Ta Food (FMC): Benefiting from the yen's appreciation, this year's net profit may increase by 24%

In the second quarter, Sao Ta Food Joint Stock Company (stock code FMC-HoSE) recorded revenue of 1,243 billion VND, up 20% over the same period in 2023. The above results came from shrimp revenue in the period increasing by 21% and consumption output increasing by 22% compared to the second quarter of 2023, mainly from the Japanese market.

Sao Ta Food is currently the largest Vietnamese shrimp exporter to the Japanese market. Although Sao Ta Food's shrimp selling price to the Japanese market is still 1% lower than the same period last year, the company's gross profit margin in the second quarter of 2024 still improved strongly, increasing by 4.7 percentage points.

This comes from Sao Ta Food's self-sufficiency rate of raw shrimp, which has increased sharply as the production of self-farmed raw shrimp has increased. In the first quarter of 2024, 200 hectares of new farming areas out of the company's current 525 hectares of farming areas were harvested, and these shrimps were sold in the second quarter of 2024.

However, Sao Ta Food's business results in the second quarter of 2024 were somewhat restrained when the anti-dumping duties refund did not take place due to the lack of final results from the investigation. The company also recorded anti-subsidy duties provisions, causing a significant increase in selling expenses.

Therefore, Sao Ta Food recorded 72.4 billion VND in after-tax profit in the second quarter of 2024, down 5% compared to the same period in 2023.

Regarding the business outlook for the second half of this year, Sao Ta Food's shrimp consumption output is expected to increase as key markets enter the year-end holiday season and the economies of countries accelerate recovery as the US Federal Reserve (Fed) cuts interest rates.

The latest data shows that Sao Ta Food's export output in July 2024 maintained a growth rate of 7% over the same period last year, signalling that the growth momentum is gradually being consolidated.

Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food, also said that although there are still some difficulties, in general, the second half of 2024 is a "more breathable period.".

According to a recent assessment by Rong Viet Securities, Sao Ta Food's shrimp selling price in the second half of this year is expected to increase by 9% compared to the same period last year. Notably, Sao Ta Food also benefits from the re-appreciation of the Japanese yen.

Specifically, although Sao Ta Food records revenue in USD in the Japanese market, the increase in the yen/USD exchange rate will help the company convert more USD and earn more VND. Therefore, the company still benefits in the context of the increase in the Yen/VND exchange rate, according to Rong Viet Securities. Currently, the Yen/VND exchange rate is 5% higher than the previous quarter.

Based on current market conditions, Sao Ta Food's revenue this year is forecasted to reach 6,435 billion VND and the parent company's after-tax profit will be 342 billion VND, up 26% and 24%, respectively, compared to 2023.