Seafood stocks surged on positive business outlook

( Since the beginning of February, seafood stocks of shrimp and pangasius companies have recorded a spectacular breakthrough despite the erratic movements of the general market.

Specifically, Sao Ta Foods stock (FMC) witnessed an increase from 47,200 VND at the end of January to 62,500 VND/share at present, up 32%. Vinh Hoan Corporation stock (VHC) increased from 60,000 VND/share to 85,600 VND/share, up 42% during the same period. Nam Viet's (ANV) increased from 27,200 VND/share to 41,400 VND/share, IDI nearly doubled from 11,000 VND/share to 22,250 VND/share…

 Movement of seafood stocks from the end of January till now.
Source: TradingView

The movement of seafood stocks reflects the prospect of positive business from the last quarter of 2021 to the first quarter of this year.

Sao Ta Foods Joint Stock Company (HOSE: FMC), a member of the PAN Group (HOSE: PAN) reported the sales revenue of USD 40.2 million in the first 2 months of 2022, (~ VND 916.6 billion), increased by 81% on the corresponding period last year.

Sao Ta's business performance improved strongly from the fourth quarter of 2021 when its revenue reached VND 1,444 billion, up 19% and profit after tax of parent company shareholders reached VND 105 billion, up 65%. Harvesting self-cultivated shrimp decreases product costs and enhances profits for the enterprise..

Similarly, Vinh Hoan Corporation  (HoSE: VHC) also benefited from recovering demand in most markets, especially the US with increased export prices. Revenue in the first 2 months of the year reached 1,900 billion VND (including Sa Giang), up 73% over the same period last year.

Vinh Hoan also recorded a 39% increase in revenue for the last quarter of 2021 to VND 2,693 billion and profit after tax of parent company shareholders rose 2.7 times to VND 455 billion.

International Development & Investment Joint Stock Company (HOSE: IDI) declared a profit of VND 84.6 billion in the fourth quarter of 2021, nearly 2.5 times higher as compared to the same period last year. As a result of this remarkable performance, the overall profit for the year grew by 42% to VND 136 billion.

IDI leaders claimed that the enterprise had enough export orders till the end of the second quarter this year. The company has simultaneously prepared a stockpile of up to 1,400 billion VND of cheap pangasius (17,000 - 18,000 VND/kg) for this recovery in market demand, especially in Mexico and Brazil - where IDI accounted for large market share.

According to data from the Vietnam Association of Seafood Exporters and Producers (VASEP), following the recovery momentum from the end of last year, the first two months of the year recorded seafood export turnover reaching 1.5 billion USD, up 51% on the corresponding period last year. Exports of pangasius were worth 384 million dollars, up 93%, while shrimp exports were worth 550 million dollars, up 46%.

VASEP affirmed that the market demand is very high for Vietnamese seafood. The US bought 346 million USD of seafood from Vietnam in only two months, increasing 84% from the same period previous year. Exports to China have shown positive signs of recovery since January and continued to increase strongly by 135% in February to reach USD 91 million. The turnover of seafood exports to this market in the first two months of 2022 was USD 168 million, up 91% compared to the same period last year.

Other traditional export markets including Korea, Canada, Australia and European countries all saw an upward trend in value by more than double digits, only Japan rose by 8% in February and 15% cumulatively in 2 months. Compared with other major markets, Japan’s economy is in stagnation: the average salary level increases slowly, while the consumption tax in this country increases steadily from 3% to 10%, affecting income and consumer spending.

VASEP forecasts that seafood exports will continue its uptrend in the upcoming months due to robust demand from markets. The war between Russia and Ukraine has more or less affected exports to Russia and Ukraine, although these two markets only account for a tiny proportion of Vietnam's overall seafood exports (Russia accounted for 2%, Ukraine accounted for 0.3%). On the other hand, this conflict will increase fuel prices, leading to increases in other input costs and affecting prices and profits of seafood companies. Accordingly, fishing sector will suffer from stronger impact than aquaculture.

The worldwide foodservice business is recovering, according to Viet Capital Securities (VCSC). The National Restaurant Association expects restaurant and foodservice revenues in the United States to climb by 12% in 2022 after regaining 18% in 2021 as the sector progressively recovers back to pre-Covid-19 levels. The VCSC anticipates similar improvements in the food service sector in other locations as worldwide immunization rates improve.

Additionally, as of mid-February, the price of raw Vietnamese pangasius jumped 18% year-on-year and 27% year-on-year to USD 1.20/kg as a result of strong demand and restricted supply in Vietnam. The Covid-19 pandemic has disrupted not only pangasius production but also the farming and processing activities; low pangasius prices discourage farming activities in 2021. VCSC believes that this supply shortage may persist for a long time until the end of 2022 as Vietnam's pangasius supply will not fully recover until 2023.

Shrimp export prices have also registered an increase since the beginning of 2021. The average export prices of shrimp and pangasius are now on positive growth, and this trend is expected to continue in 2022, according to Agriseco.

Compiled by Khanh Linh