'Pangasius queen' Vinh Hoan's 2022 profit up 90% to $85 mln

Vinh Hoan Corporation, Vietnam's leading pangasius exporter, reported an after-tax profit of VND2,014 billion ($85.39 million) in 2022, up 90% year-on-year thanks to breakthrough business results in the first half.

The company's net revenue reached VND13,239 billion ($561.33 million), up 46%, according to its consolidated financial statement.

In the fourth quarter of 2022, the company, listed on the Ho Chi Minh City Stock Exchange (HoSE) as VHC, recorded net revenue of VND2,484 billion ($105.32 million), down 7%.

VHC's after-tax profit hit VND199 billion ($8.44 million) in the period, down 56%. This is the second consecutive quarter of VHC's profit decline after peaking in Q2/2022.

As of December 31, 2022, VHC's total assets reached VND11,580 billion ($491 million), up 32% compared to the beginning of the year. Cash and cash equivalents were VND554 billion ($23.49 million), 2.8 times compared to the beginning of the year.

At the closing session on Thursday, the VHC price hit VND68,200 ($2.89) per share.

Meanwhile, despite its business decline in Q4, Sao Ta Food JSC, listed on the Ho Chi Minh City Stock Exchange (HoSE) as FMC, reported net revenue of VND5,702 billion ($241.76 million), up 9% in 2022 and after-tax profit of VND319 billion ($13.53 million), up 11%.

As of December 31, 2022, Sao Ta's total assets hit VND2,988 billion ($126.72 million), up 10% compared to the beginning of the year, of which long-term assets increased two-fold to VND1,111 billion ($47.12 million).

The FMC price was VND37,000 ($1.57) per share at the closing session on Thursday.

In the context of reduced consumption, top broker SSI Securities said it believes that pangasius sales would be less affected than shrimp.

China's reopening is a catalyst for the industry in 2023. Although more time is needed to assess the quantitative impact of China's reopening on pangasius exports, SSI Research believes that it would benefit the industry's revenue as China is Vietnam's largest pangasius export market.

However, the Chinese market is a price-sensitive market and the average selling price to this market is always about 40% lower than the average selling price to the U.S. market.

The broker predicts that the gross profit margin of the seafood industry will decrease in 2023. With interest rates expected to remain high throughout the year, rising financing costs would continue to weigh on net margins, especially for highly leveraged companies.

Meanwhile, KB Securities still sees a number of positive factors that can support the seafood industry in 2023, including China, Vietnam's largest seafood export market, opening its economy after giving up "Zero-Covid", helping to significantly increase demand at restaurants and hotels.

However, Vietnamese pangasius still has to compete fiercely with tilapia in this country, so KB Securities believes that the opening of China only reduces growth pressure, but does not create a boom in this market.

Besides, the reduced freight rates help businesses reduce the burden of logistics costs, offsetting profit margins when they have to reduce selling prices. Seafood exporters to the U.S. market like VHC and FMC may benefit in case the U.S. dollar increases in price.