Livestock industry stocks rally on skyrocketing pork prices

Tickers of livestock farming companies gained sharply on Friday thanks to soaring pork prices.

Of which, HAG of Hoang Anh Gia Lai JSC and BAF of BaF Vietnam Agriculture JSC hit their ceiling prices of VND14,600 ($0.57) and VND22,100 ($0.87) per share, respectively.

Many other livestock stocks such as DBC of Dabaco Group, MSL of Mitraco Livestock JSC, and MML of Masan MEATLife JSC saw impressive price increases from 6% to 9%.

In the past month, HAG and DBC have surged about 30%, PSL of Phu Son Livestock JSC by 20%, and BAF and MML over 11%.

This boost among the livestock group has been supported by skyrocketing pork prices since the beginning of May. According to animal feed producer Anova Feed, the average price of pork in Vietnam reached VND64,700 ($2.54) per kilogram on Friday, a rise of 4.7% from the beginning of the month and 30% from the beginning of the year. In many northern localities such as Hanoi, Bac Giang, Thai Nguyen, and Hung Yen, pork prices have reached VND67,000 per kilogram.

Ngo Cao Cuong, finance director of BaF Vietnam Agriculture, forecast that pork prices will increase to about VND70,000 ($2.75) per kilogram until the end of the second quarter due to lack of supply.

Livestock enterprises are having to import brood sows at high costs because of the impact of African swine fever. The BaF leader held that there are currently no brood sows or weaned pigs to develop new herds, so prices are unlikely to fall.

In 2023, especially in the second half, pork prices plummeted to below VND50,000 ($1.96) per kilogram, and farmers and businesses struggled to make a profit, or even suffered losses. The recovery of pork prices will help producers who expanded their herds to enjoy great profits.

BaF Vietnam Agriculture has stepped up investment in barns and increased pig farming since 2023, and this year's sales are estimated at nearly 610,000 pigs, 2.1 times higher than last year. This year, the company is targeting revenue of VND5.5 trillion ($216.12 million), up 6% year-on-year, and after-tax profit of VND306 billion ($12 million), 10 times higher than last year.

Nguyen Nhu So, chairman of Dabaco, said his firm imported 10,000 breeding pigs in 2023 and a new batch on April 24, 2024. Dabaco is set to earn VND730 billion ($28.68 million) in profit after tax in 2024, many times higher than the previous year's VND25 billion.

In the first quarter, the company achieved VND73 billion ($2.87 million) in after-tax profit, a marked improvement compared to a loss of VND321 billion in the first quarter of 2023. So forecast that the firm’s profit in the second quarter will hit VND250 billion.

Due to caution, Hoang Anh Gia Lai did not invest in more pigs in 2023. In the context of rising prices, the company made the decision in the hope of reaping the fruits in the last quarter of this year and 2025.

Mitraco Livestock expects a net profit of VND5 billion ($196,470) after a loss of VND34 billion last year, while Masan MEATLife projects a loss of VND400 billion ($15.72 million) or a humble profit of VND100 billion this year, from a loss of VND540 billion in 2023.

Appreciating the prospects of the livestock industry this year, broker Vietcombank Securities (VCBS) said pork prices have increased sharply since the beginning of the year and are expected to maintain a high level in the near future.

This is because demand for developing new herds is quite low due to possible disease outbreaks and a law restricting small households from raising livestock in the inner city, it stated, adding that the pig imports had been controlled.

On the other hand, the price index of cereals in April decreased by 19-30% compared to the same period last year, helping to save input costs for the livestock industry, according to VCBS.

Supplies of cereal products such as corn and soybeans are forecast to remain in surplus this year, thus keeping animal feed input prices low. This, combined with increasing selling prices, will help livestock enterprises expand their gross profit margins, it noted.