Seafood stocks surge on business recovery

Thursday, Nov 18, 2021 08:47

Inside a processing plant of Vinh Hoan. — Photo

Many seafood stocks rose strongly thanks to the news that production and export of the industry recovered significantly since October.

After a long period of halting production or operating at low capacity amid social distancing measures, seafood processing enterprises are recovering. Orders keep coming while production cannot keep up with export demand.

The Viet Nam Association of Seafood Exporters and Producers (VASEP) said that after declining for two consecutive months, the value of seafood exports reached US$918 million in October, up 47 per cent compared to September. By the end of October, the country's seafood exports climbed 2.4 per cent year-on-year to $7.1 billion.

At Minh Phu Seafood Corporation (MPC), business has been active again since October. It has started working on three seafood processing plants with a capacity of 18,000 tonnes per year each, and a packaging plant with a capacity of 5,000 tonnes per year.

In the third quarter, the company's revenue decreased by 36.7 per cent on-year to VND2.78 trillion due to the impact of the COVID-19 pandemic, but its profit after tax still increased 18.6 per cent to more than VND289 billion.

Le Van Diep, Deputy General Director of Minh Phu, said that the fourth outbreak of the coronavirus with the Delta variant spreading in the southern provinces has caused disruptions in supply chains, including the shrimp industry.

Shrimp processing factories in the Mekong Delta all have to operate under the “three-on-site" model and “one route, two destinations", which reduced shrimp processing capacity by 30-70 per cent. Therefore, they could not fulfil orders for customers, leading to a decrease in revenue.

However, thanks to rising demand from major shrimp export markets, Minh Phu has better selling prices, resulting in higher profit margins and still recording profit.

For the first nine months of 2021, it posted net revenue of VND8.9 trillion, down 11 per cent, with profit after tax up 14 per cent over last year to VND544 billion.

In the fourth quarter, Minh Phu is expected to continue to benefit from higher selling prices amid rising demand for shrimp at the end of the year.

More than 3,200 employees from inside and outside Hau Giang Province have come back to work in Minh Phu’s plants since mid-October. The return will help Minh Phu increase productivity and meet customer orders.

In 2021, it set a target of nearly VND15.8 trillion in revenue and VND1.09 trillion in profit after tax. By the end of the third quarter, the company has only completed 56 per cent of the revenue target and 52 per cent of the profit plan. Therefore, to complete the yearly plan, Minh Phu needs to accelerate in the fourth quarter.

Meanwhile, Vinh Hoan Corporation (VHC) has just decided to add another VND145 billion to Feed One to build a seafood processing plant.

Previously, it planned to spend VND1.3 trillion for investment in 2021, of which VND700 billion was spent on building an animal feed factory and Vinh Hoan hatchery, and getting land ownership for a high tech agriculture and aquaculture complex.

In the first three quarters of the year, Vinh Hoan recorded net revenue of VND6.4 trillion, up 24 per cent, and net profit of VND647 billion, up 17 per cent. With the business results, the company has fulfilled 74 per cent of the revenue target and 93 per cent of profit after tax target for the whole year. It is expected to easily complete the business plan thanks to the bright prospects of the export market at the end of the year.

Sao Ta Foods JSC (FMC) was also affected by the COVID-19 pandemic in the third quarter, causing revenue to be flat compared to the same period last year, while profit fell slightly 9.5 per cent to VND64 billion. In the first nine months of the year, its revenue reached over VND3.8 trillion and profit after tax was VND176 billion, up 17.1 per cent and 8.7 per cent, respectively.

Agribank Securities Corporation (Agriseco) said that the tough times for Sao Ta have passed. The company could fully restore production capacity since mid-September as the pandemic is gradually controlled with higher vaccination rates. Sao ta is expanding the farming area and increasing capacity in 2022.

On the stock market, all these companies' stocks ended higher on Tuesday, with MPC shares up 0.21 per cent, VHC up 1.56 per cent and FMC up 1.33 per cent.

Trading on UpCOM exchange, MPC shares have risen 23.4 per cent compared to the beginning of October, while VHC shares on the Ho Chi Minh Stock Exchange (HoSE) were up 24 per cent and FMC shares (on HoSE) up 6.4 per cent.

Lower freight prices, higher orders

Seafood enterprises are trying to overcome difficulties to increase output at the end of the year. Agriseco said that since the beginning of October, sea freight rates are cooling down with a decrease of 50 per cent in Baltic Dry index (BDI), which will help businesses reduce costs in the fourth quarter.

Demand from export markets continues to grow as economies reopen. The RCEP Agreement is expected to be approved and come into effect in the beginning of 2022, opening up more potential export markets for businesses.

According to VASEP, the demand from import markets is still high, seafood processing production is on the rebound and is expected to grow again in November and December when vaccination rates in the Mekong Delta provinces increase, limiting the impact of the pandemic. — VNS

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