SI Research forecasts profits from seafood of PAN Group members in 2022

( In Q1/2022, Bentre Aquaproduct Import and Export JSC (HOSE: ABT) recorded a revenue of 133 billion VND (up by 109% over the same period) and profit of 7.7 billion VND (down 54% over the same period). Gross profit margin improved significantly from 14.3% in Q1/2021 to 20.2% in Q1/2022 due to sharp increase in selling prices; however, transportation costs tripled during the Q1/2022, leading to a shrink in net profit.

SI Research forecasts profits from seafood of PAN Group members in 2022

Export products of ABT include pangasius (accounts for 62% of revenue) and clams (accounts for 25% of revenue). The main export markets include the EU (40% of total exports) and Japan (33% of total exports).

Pangasius export demand is expected to continue to increase, many pangasius companies have increased their average selling price by 40% compared to the beginning of the year.

SSI Research expects ABT to benefit from this trend and continue to record strong revenue growth this year. However, raw fish, aqua feed and transportation costs also increased by 33%, 15% and 80% respectively over the same period. For that reason, even when export prices remain positive, SSI Research believes that increasing costs will continue to put pressure on ABT's profit.

ABT’s revenue and after-tax profit are estimated at 522 Billion VND (up 52.7% YoY) and 48 Billion VND (up 42% YoY), respectively.

ABT's long-term outlook: Current processing capacity is 10,000 tons/year and ABT has no plans to expand production capacity. Instead, the company is investing in improving production technology to reduce waste in fish processing. This can help improve both production capacity and gross profit margin. Currently, due to small-scale production, ABT is 100% self-sufficient in fish and clam materials.

In Q1/2022, Sao Ta Foods Joint Stock Company (HoSE: FMC) recorded revenue of 1.3 trillion VND (up 37.1% over the same period) and net profit of VND 42.3 billion VND (up 36.5% over the same period), with sales volume increased by 36% over the same period. According to NOAA, the average selling price of vannamei exported to the US in Q1/2022 increased to US$12/kg (up 14% over the same period), signaling strong demand growth. According to VSEPR, the price of raw shrimp has increased by 4% over the same period. Due to the seasonality, the price of raw shrimp is usually lower in the Q2, Q3 and higher than in the Q1, Q4.

Currently, CP holds 25% shares of FMC. As a result, FMC gets a certain discount (about 20% discount compared to secondary wholesalers) when purchasing aqua feed and raw shrimp from CP. Inflationary pressures can become an advantage for FMC in terms of cutting production costs.

In 2022, FMC will likely focus more on the key export market, Japan (accounting for 28% of total exports in 2021), due to less competition, higher average selling prices thanks to lower shipping costs and Japan’s preference towards value-added products. However, due to high demand in the US, Khang An Foods (a subsidiary of FMC) recently signed a new contract with the Costco- wholesale supermarket chain in the US. Because the US market prefers raw white shrimp, the gross profit margin in the US market is lower than that of Japan and Korea.

"We estimate net revenue and profit after tax to reach 6.3 billion VND (up by 21.2% YoY) and 369 billion VND (up by 28.7% YoY) respectively in 2022. We assume that shrimp consumption will increase by 18% year-on-year, while the average selling price of shrimp will increase by 3% year-on-year. Although raw material cost of shrimp is not as volatile as pangasius, we expect FMC to improve its gross profit margin in 2022 to 10.6% (it was 10.2% in 2021) due to the expand of exports to Japanese market," - SSI Research report stated.

SSI Research assumes that administrative and selling expenses to turnover ratio will remain unchanged year-on-year, at 5.1%.

FMC's long-term outlook: The company owns 320 hectares of farming area, providing 30% of total shrimp input. FMC plans to increase farming area to increase profit margin.

The remaining supply of raw shrimp comes from production contracts and purchases from small-scale farms. FMC's processing capacity is 25,000 tons per year and is currently processing at 92% of its capacity in 2021.

The company has started constructing two new processing plants with a total designed capacity of 15,000 tons/year. These new factories are expected to come into operation in Q3/2022, bringing FMC's total processing capacity to 40,000 tons per year by year-end.

Compiled by My Hanh



Ms Kim Thu


Tel: 84.24.3771.5055 (ext 203)

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