Rice stocks plunge, delist despite Vietnamese rice success in global arena

Vietnamese rice is continuing to make gains in the global arena, but domestic rice businesses are facing constant losses and plunging stock prices.

Vietnam’s rice export turnover in the first four months of 2024 exceeded the $2 billion mark, increasing nearly 12% in volume and 36.5% in value year-on-year, according to the Ministry of Agriculture and Rural Development.

Nguyen Anh Son, director of the Import-Export Department under the Ministry of Industry and Trade, said that according to forecasts, the world will face a shortage of about seven million tons of rice in 2024.

Global rice supply is no longer abundant as production in India - the main supply source accounting for 40% of global output - has decreased by four million tons, while other markets such as the Philippines, Indonesia, Thailand, and Cambodia have also seen production fall due to the impacts of El Nino and climate change, he cited.

“This opens up huge opportunities for rice exporting countries, including Vietnam. Besides main markets such as the Philippines, Indonesia, and Malaysia, Vietnamese rice has also been shipped to many others. This year, Vietnam can export 8.13 million tons of rice, equivalent to last year’s figure, while still ensuring national food security,” Son noted.

Although the industry’s picture is bright, the performance of rice stocks on the exchanges is negative. A series of rice stocks plummeted as businesses’ 2023 audited financial statements revealed multiple problems, and some have even delisted.

Despite the Vietnamese stock market recovering from September 2023, LTG of Loc Troi Group has recorded a decline of 23% to VND23,000 ($0.9) a share. Such poor performance is attributed to the company’s negative business situation.

The enterprise just announced its 2023 audited consolidated financial statements with a net profit of VND16.8 billion ($661,000), a fall of VND249 billion ($9.8 million) compared to the inaudited figure due to the profit from the purchase of an affiliated company being revised down by VND315 billion ($12.4 million).

Compared to 2022, Loc Troi’s profit plunged 96%, although its revenue rose 39% to VND11,893 billion ($468 million) with motivation coming from the rice segment.

In the first quarter of this year, Loc Troi reported revenue up 50% year-on-year to VND3,849 billion ($151.45 million). Notably, rice sales nearly doubled to VND3,286 billion.

However, the rice segment's gross profit margin of only 3.5% reduced the group's figure from 11% to 6.5%. On the other hand, financial costs increased due to exchange rate differences. As a result, Loc Troi reported a loss of nearly VND97 billion ($3.82 million) in Q1.

The ticker of another major rice producer, Trung An Hi-Tech Farming Joint Stock Company (TAR), will be delisted on May 21 after auditors declined the company's 2023 separate and consolidated financial statements, pending the results of the authorities' verification of a 2021 private placement, while its inventory is worth VND1,256 billion ($49.42 million).

TAR is currently traded only on Fridays. On May 3, TAR fell to its floor price of VND5,200 ($0.2) a share with more than four million units waiting for buyers after the delisting information. Since August 2023, TAR has lost 75% of its value.

Regarding business results, Trung An reported a loss of VND16 billion ($630,000) in 2023, although its revenue increased 18% to VND4,485 billion ($176.5 million). The falling gross profit margin and increasing interest expenses were cited as the reasons.

An Giang Import-Export Joint Stock Company (Angimex), listed on the Ho Chi Minh Stock Exchange as AGM, recorded a heavy loss of over VND200 billion ($7.87 million) for 2022-2023. The figure in Q1/2024 was VND15 billion, bringing its accumulated loss to VND175 billion ($590,200), approaching the charter capital of VND182 billion ($7.16 million).

At the same time, the company's 2023 financial statements also showed many problems with debts, advances, short-term liabilities greater than short-term assets, and bond liquidity. AGM is currently trading around VND4,300 ($0.17) per share, down 68% from August 2023.

Meanwhile, Vietnam Southern Food Corporation, registered on the Unlisted Public Companies Market (UPCoM) as VSF, had its stock removed from the warning list on April 5 after auditors gave full approval for the company’s 2023 financial statements. However, VSF has decreased from VND42,000 ($1.65) to VND33,200 per share since the beginning of the year.

VSF's business results have improved significantly thanks to favorable rice exports. In 2023, its revenue rose 33% to VND23,031 billion ($905 million) and its net profit reached VND23 billion ($905,000), ending a series of losses for more than a dozen consecutive years.

In Q1, the firm’s revenue increased slightly to VND4,797 billion ($188.75 million) and recorded a profit of VND1.2 billion ($47,200) from a loss of VND7 billion in the same period last year.

In general, the only bright spot in the business picture of listed rice businesses was the strong increase in revenue. However, the thin gross profit margin, plus increasing interest expenses and exchange rate differences, has dragged down their profits.