Agricultural stocks rebound strongly thanks to bright outlook

With a bright outlook and a number of other supporting factors, tickers in agricultural firms have made strong gains in the past two months, rising by 18-60% and outperforming the 11% recovery of the benchmark VN-Index.

Listed on the Ho Chi Minh Stock Exchange (HoSE), HAG of Hoang Anh Gia Lai Corporation (HAGL) recorded a price increase from VND8,000 per share to VND13,100 ($0.54) per share within two months.

HAGL pursues the business model of “two trees and one animal”, which are banana, durian and pig. The banana segment has brought a stable source of income to the company while durian is expected to start producing sweet fruits in 2024. HAGL’s main market is China where it not only wholesales but also retails its products across supermarket networks.

In addition, HAG has been motivated by debt repayment and restructuring, private placements of shares to strategic partners, and sales of investments to cover loan interest costs.

The stock of HAGL Agrico, a subsidiary of HAGL, (HoSE: HNG), also surged from VND3,300 to VND5,330 ($0.22) per share. HAGL Agrico is developing a multi-segment business model from fresh fruits (banana, pineapples, mango, grapefruit and durian) to processed combined with cow farming. The company has gradually converted ineffective rubber farms to fruit trees.

Recently, HAGL Agrico approved the establishment of an agricultural production and investment company in southern Laos with capital of up to $400 million. The firm is also collecting shareholder feedback on a plan to invest in large-scale fruit tree growing and cow farming projects in Laos’ Attapeu and Sekong provinces.

While HAGL and HAGL Agrico are direct producers of agricultural products, PAN Group (HoSE: PAN) is a supplier of seeds and materials. PAN has increased 18% to around VND21,000 ($0.86) per share since the beginning of November in anticipation of benefiting from the rise of Vietnamese agricultural products.

PAN Group owns many listed companies including seeds and rice supplier Vinaseed, Vietnam Fumigation JSC (VFG), seafood producer Saota Foods JSC (FMC), and confectionery and food company Bibica. When agricultural exports improve, the demand for seeds and materials will increase, helping member units such as Vinaseed and VFG increase revenue. In addition, some seafood stocks such as ANV of Nam Viet Corp. and VHC of Vinh Hoan Corp. have also expanded 18-23% over the past two months.

Nam Viet specializes in processing and exporting frozen tra and basa fish (pangasius). In the first nine months of 2023, it reported a 11% decrease in revenue from the same period in 2022, with the pangasius segment alone falling by 17%.

China is Nam Viet's largest export market with a proportion of up to 40%. The company’s leaders said that in the past year, Nam Viet has developed large customer bases in Beijing and Guangzhou in addition to its traditional market in Shanghai. Its revenue in this market soared 129% to VND852 billion ($35 million).

At the end of 2023, the firm announced a share bonus plan with a ratio of 1:1 (shareholders who own one share receive one new share). Nam Viet plans to issue 133.1 million shares, raising its charter capital to VND2,663 billion ($109.4 million), surpassing the tra fish "queen" Vinh Hoan.

In 2023, Vietnam's agricultural sector succesffully overcome "headwinds", with good harvests, good prices in some segments.

The sector's growth rate reached 3.83%, the highest level in recent years and exceeding the target of 3% assigned by the government (3%). Its export turnover hit $53 billion, with a record trade surplus of $12.07 billion.

A major contributor to export value was the fruit and vegetable sector, with a record figure of $5.6 billion, an increase of 50% compared to the previous record set in 2018 of $3.81 billion. Durian rose to become the number one exported fruit and vegetable product, with a turnover of more than $2 billion in 2023.

Five other farm products posting record-high export revenues were rice with $4.78 billion, up 38.4%; cashew with $3.63 billion, up 17.6%; coffee with $4.18 billion, up 3.1%; shrimp with $3.38 billion, down 21.7%; and wood and wooden products with $13.37 billion, down 16.5%.

China, the U.S. and Japan were the three largest export markets of Vietnam's agricultural products. While the export turnover decreased by 18% year-on-year to the U.S. and 7.4% to Japan, the figure to China increased by 18%.