'Pangasius queen' Vinh Hoan's Q1 profit down 59% to $9.6 mln

Vinh Hoan Corporation, Vietnam's leading pangasius fish exporter, reported an after-tax profit of VND225.7 billion ($9.6 million) in the first quarter of 2023, down 59% year-on-year.

The company's net revenue reached VND2.22 trillion ($94.5 million), down 32%, according to its Q1 consolidated financial statement.

As of the end of March, Vinh Hoan's total assets stood at VND11.67 trillion ($496.52 million), of which short-term assets accounted for 66%. Inventories increased by 18% to VND3.32 trillion ($141.14 million).

The company reported an after-tax profit of VND2.01 trillion ($85.39 million) in 2022, up 90% year-on-year thanks to breakthrough business results in the first half.

Its net revenue reached VND13.24 trillion ($561.33 million), up 46%, according to its consolidated financial statement.

At the closing session on Thursday, VHC stood at VND61,900 ($2.63).

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

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

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

The broker predicts 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 will 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 its "Zero-Covid" policy, helping to significantly increase demand at restaurants and hotels.

However, Vietnamese pangasius still has to compete fiercely with tilapia in China, so KB Securities believes that the reopening will only reduce growth pressure and not create a boom in this market.

Besides, reduced freight rates are helping businesses to 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 also benefit if the U.S. dollar increases in price.