Seafood industry’s profit in the Q3: VHC, ANV, FMC passed the peak, MPC decreased over the same period

( Profit after tax (PAT) in the Q3 of seafood enterprises such as VHC, ANV, and FMC, still increased sharply compared to the low base level of the same period but has passed the peak of the Q2. In contrast, the PAT of MPC in the third quarter declined YoY but increased QoQ.

According to Vietnam Customs, in the first 9 months of 2022, the seafood exports turnover reached US$8.5 billion, up 38% over the same period.

In September, Vietnam seafood exports reached more than 862 million USD, still up 38% over the same period last year but fell for the first time after 7 months below 900 million USD. Inflation is reducing the import demand, so exports to major markets have slowed down in September.

The slowdown in seafood exports, especially in major markets such as the US, EU, China has appeared since July, due to the impact of inflation, exchange rate fluctuations and raw material shortages.

In particular, inflation has restrained the growth of seafood exports of some "big exporters" in the pangasius and shrimp sector in the third quarter.

Profits "pass" the peak

Specifically, in the third quarter, Vinh Hoan JSC (code VHC) recorded net revenue of VND 3,261 billion, up 46% over the same period. Deducting expenses, VHC's pre-tax profit is 546 billion VND, up 86% yoy and profit after tax is 460 billion VND, up 79% yoy mainly thanks to the increase in selling price. Despite strong growth compared to the same period  last year, this is the lowest profit after tax (PAT) of the "queen of pangasius" in the last 4 quarters.

In the third quarter, VHC's revenue decreased by 965 billion VND compared to the second quarter of 2022, while financial expenses and business administration expenses were still large. The company had to increase provision for devaluation of stock investment (as of September 30, 2022, the company has to make provision for nearly VND 79 billion). These are also the main reasons why VHC's PAT dropped compared to the previous quarter.

Chú thích ảnh

Accumulating 9 months, VHC recorded net revenue of 10,755 billion VND, up 69% and PAT of 1,815 billion VND, up 179% over the same period.

Similarly, in the third quarter, the growth of Nam Viet Joint Stock Company (code ANV) also slowed down after the explosive growth in the first two quarters of the year. During the period, ANV's net revenue increased by 89% yoy to over 1,238 billion VND. However, all expenses recorded an increase over the same period, in which financial expenses increased by 2.3 times, reaching nearly 50 billion VND due to a 44% increase in interest expense and the 7.5 times loss on exchange rate differences in the same period.

ANV's PAT in the Q3 was nearly 120 billion VND, significantly improved compared to the loss of 13 billion VND in the third quarter of 2021, but still a sharp decrease compared to 207 billion VND and 241 billion VND in the first and second quarters.

However, accumulated in the first 9 months of the year, ANV's net revenue still reached 3,752 billion VND, up 54% over the same period last year and PAT reached 647 billion VND, 8 times higher than the same period.

Meanwhile, Sao Ta Food Joint Stock Company (code FMC)'s net revenue reached 1,753 billion VND and PAT reached nearly 80 billion VND, up 8% and 25.5% respectively compared to the same period. However, compared to the second quarter, FMC's profit after tax decreased by 48% although revenue increased by more than 342 billion VND. The main reason is due to the increase in financial expenses, selling expenses and administrative expenses.

Accumulating 9 months, FMC's net revenue reached 4,491 billion VND, profit after tax was over 240 billion VND, up 20% and 36% respectively over the same period.

On the other hand, Minh Phu Seafood Corporation (code MPC) recorded a decline in revenue and profit compared to the third quarter of 2021 but still increased compared to the first two quarters of the year. Specifically, in the third quarter, Minh Phu recorded a 10% decrease in revenue compared to the same period last year to 2,422 billion VND and PAT decreased by 15% to 197 billion VND due to the decrease in revenue in the period.

In 9 months, MPC's net revenue was almost unchanged compared to the same period last year (at 7,258 billion VND), while PAT increased by more than 19% to nearly 489 billion VND.

In addition to these big seafood exporters, a number of seafood enterprises also recorded good growth in revenue and profit in the third quarter. In which, Mekong Seafood Joint Stock Company (code AAM) recorded net revenue 3.4 times higher than the same period in 2021, reaching more than 46 billion VND.

Revenue increased but COGS increased more slowly, helping AAM move from gross loss to gross profit of more than 5 billion VND. Thereby, net profit was nearly 3 billion dong, 18.7 times higher than the same period last year. Accumulating 9 months, AAM earned nearly 14 billion dong of net profit, while the same period lost more than 4 billion VND.

Expect demand to rebound 

The slow growth in revenue and profit of seafood enterprises compared to the first two quarters of the year is not unexpected for most securities companies in the context of slowing seafood exports due to inflationary pressure and decline in demand in some main export markets.

In the recent seafood industry report, SSI Research also forecast that seafood export growth will slow down in the third quarter of 2022 due to high inventories and inflationary pressure in major export markets, especially the US.

With weak demand and no shortage of raw material supply, SSI Research believes that the average selling price will decrease by 15-20% over the same period in 2023.

While seafood exports to the US market decelerated, the demand in the Chinese market has steadily increased since the economy reopened. Although this market is very price sensitive and volatile, it is highly likely that the Chinese market will maintain its growth momentum in 2023.

According to SSI Research, most enterprises have been seriously affected by the social distancing due to COVID-19 in the third quarter of 2021, so it is likely to have a decent earnings growth in the third quarter of 2022. In the fourth quarter of 2022, pangasius producers expect demand to rebound to serve the holiday season.

Analyzing some specific enterprises, SSI Research said that VHC recorded net revenue of 917 billion VND in September 2022 (up 35% over the same period, down 28% compared to the previous month).

Chú thích ảnh

Seafood exports will slow down in the Q3 of 2022 due to high inventories and inflationary pressure in major export markets, especially the US.

Pangasius revenue reached 540 billion VND, up 15% over the same period, down 31% compared to August and only equal to 46% of revenue in April (peak season), mainly due to significant decrease in export revenue to the US, China markets. In which, the US market decreased by 7% over the same period, down 37% compared to the previous month. The Chinese market fell 4% year-on-year, down 52% compared to August.

SSI Research estimates that if the average selling price to the US market increases by 24% over the same period in September, the volume sold to the US will decrease by 25%.

Although VHC mainly contracts FOB, the company has to share shipping costs with importers to boost revenue and maintain relationships with customers. This will negatively affect the company's net profit margin in the third quarter of 2022.

ANV has started exporting to the US market since August with a revenue of 20 billion VND, accounting for about 5% of total revenue. However, the export price to the US market has decreased from 4.8 USD/kg in the second quarter of 2022 to 4.3 USD/kg in the third quarter of 2022. SSI Research forecasts that ANV's export volume to the US in the fourth quarter of 2022 is still insignificant.

As for FMC, SSI Research said that shrimp is one of the seafood products with high prices, while the average selling price of Vietnamese shrimp is higher than that of India and Ecuador in the US and EU markets. Therefore, FMC forecasts that sales of shrimp will tend to decrease in the fourth quarter of 2022 due to the remaining inflationary pressure.

The Vietnamese shrimp raw material market faces adverse weather conditions this year, however FMC is optimistic that their self-sufficient shrimp material will be priced below market price, which may help to maintain the trend of gross profit margin in the fourth quarter of 2022.

However, according to the forecast of FMC leaders, from now until the end of the year, due to the influence of global inflation, consumption will not be high. Therefore, sales will not increase sharply in the last months of the year, but the enterprises still ensure to complete the year plan with sales and profit targets.

Compiled by Thuy Linh

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