P/E above 90x: What makes Vietnam dairy maker LOF attractive to investors?

With a share price of around VND260,000 ($9.87) as of last Friday and 2025 earnings per share at VND2,836 ($0.11), shares of LOF International Dairy Products JSC (HoSE: IDP) are trading at a price to earning ratio exceeding 90x, significantly higher than the dairy industry average of around 18-20x.

Profit plunges while valuation soars

According to its Q4/2025 financial statements, Ho Chi Minh City-headquartered IDP recorded net revenue of VND7,557 billion ($287 million) for the full year, down 2.8% from 2024. Financial income reached VND173 billion ($6.57 million), remaining largely flat.

Meanwhile, various costs, including cost of goods sold and financial, selling and administrative expenses, increased across the board, leading to a sharp decline in profit. Pre-tax profit fell to just VND245 billion ($9.3 million), down approximately 77.9% from VND1,108 billion in the previous year.

As a result, the price to earning (EPS) ratio plunged from VND14,183 ($0.54) to VND2,836 ($0.11). In contrast, IDP’s share price rose by about 44% from around VND180,000 ($6.83) at the end of 2024. This divergence between earnings and share price has pushed the price to earning (P/E) ratio to an unusually high level.

However, it is worth noting that IDP is a low-liquidity stock, with average daily trading volume of only a few thousand shares, meaning the market price may not fully reflect underlying fundamentals.

This stems from a highly concentrated ownership structure: three major shareholders - Blue Point JSC, Vietcap Securities, and Daytona Investment - collectively hold over 70% of charter capital. Excluding leadership holdings, the free float is currently only around 13%.

Despite declining profits, IDP’s financial position remains relatively solid. The company still allocated VND327 billion ($12.42 million) for dividend payments in 2025, as compared to VND521 billion in 2024.

Stepping up investment, expanding scale

In 2025, IDP significantly ramped up investment activities. Total assets increased by VND2,657 billion ($100.88 million), nearly three times the increase recorded in the previous year.

The company contributed 99.8% of VND258 billion ($9.8 million) in charter capital to establish Redpine JSC, while also spending VND259.2 billion to acquire 14.4 million shares in Ho Toan JSC, turning it into a subsidiary. This acquisition added approximately VND500 billion ($18.98 million) in fixed assets to IDP’s consolidated financial statements.

In addition, phase 1 of the LOF Binh Duong dairy factory project in the former Binh Duong province (now part of HCMC) has been completed, with total construction value exceeding VND1,800 billion ($68.34 million). Phase 2 is expected to begin in 2026, with operations slated for 2027.

Alongside these investments, total production and business expenses in 2025 rose by more than VND1,100 billion to around VND8,000 billion ($303.76 million). Notably, selling support expenses increased from VND347 billion ($13.18 million) to VND493 billion, a 42% jump. This suggests the company is ramping up spending to expand market share and prepare for a new growth phase.

Competitive pressure and the growth equation

According to a global market research company IMARC Group, Vietnam’s dairy market is projected to grow at an average annual rate of 9.4% during 2025-2032. However, competition is intensifying as companies simultaneously increase spending on marketing, promotions, and distribution expansion.

In fact, despite higher selling expenses, IDP’s revenue did not grow in 2025, reflecting significant competitive pressure.

In early 2026, IDP’s board of directors approved an overseas investment plan involving the establishment of a legal entity in Singapore, with total investment capital of $29 million, including $9 million in equity.

While the entity is expected to engage in import-export and distribution of food and beverages, these are considered secondary objectives. Its primary focus is financial investment and seeking capital contribution opportunities, meaning its direct contribution to core operations remains unclear.

These expansion efforts indicate that IDP is prioritizing long-term growth foundations rather than short-term profit optimization. This partly explains its high valuation, as investors are betting more on future prospects than current performance. Investments in manufacturing, distribution expansion, increased selling expenses, and gradual exploration of international markets suggest the company is in a phase of “sacrificing profits for growth.”

However, amid intensifying competition and a lack of clear revenue acceleration, the realization of these expectations remains uncertain and will require time to validate. For investors, the key question is no longer whether IDP can grow, but whether future growth will be fast enough to justify its current premium valuation.

This Friday, IDP will hold its 2006 AGM in Ho Chi Minh City. This is expected to be an important opportunity for management to clarify growth strategy, investment progress, and profit outlook - key factors for the market to reassess the company’s valuation.

Vietcap’s strong influence at LOF

Although directly holding only about 15% of IDP’s charter capital, Vietcap Securities (HoSE: VCI) exerts significant influence over the company. This relationship is clearly reflected in overlapping senior personnel.

First is leadership movement at the top. After 18 years as CEO, To Hai officially stepped down as CEO and legal representative of Vietcap on October 30, 2025, to focus on his role as chairman of IDP. At the same time, Dinh Quang Hoan, an IDP board member, also left his position as deputy CEO at Vietcap.

Second is the interwoven personnel network. Ton Minh Phuong, a member of IDP’s supervisory board, was appointed to replace Hai at Vietcap. Meanwhile, Nguyen Thi Ngoc Thu, currently a senior manager in Vietcap’s investment banking division, has been nominated to replace Phuong at IDP.

The presence of key Vietcap executives in strategic roles across both the board of directors and supervisory board highlights the firm’s influence over IDP, extending well beyond its equity ownership.