Vietnam agribusiness Hoang Anh Gia Lai sees lower profit this year

Hoang Anh Gia Lai, a leading agricultural group Vietnam, has targeted an after-tax profit of VND1.32 trillion ($51.85 million) this year, down 26% year-on-year, as it plans greater livestock farming investments.

CEO Hoang Xuan Thang explained said at the group’s 2024 AGM held Friday that they would invest heavily in pig farming this year and that the investment would only provide returns in 2025.

He said the revenue target for 2024 was VND7.75 trillion ($304.42 million), up 20.2% year-on-year.

The revenue will mainly come from orchards (VND5.54), banana-fed pigs (VND1.55 trillion), and other products (VND660 billion).

This year, the company, listed on the Ho Chi Minh Stock Exchange as HAG, will increase its banana cultivation area by 2,000 hectares to 9,000, and its durian area by 500 hectares to 2,000, Thang said, adding the areas will be expanded to 10,000 and 3,000 hectares by 2025, respectively.

The group plans to cultivate banana, durian and other economically valuable trees on 30,000 hectares by 2030.

It will also apply the “circular agriculture” model in the 2024-2030 period, using advanced technology to recycle by-products and waste in crop and animal farming, forming a closed production chain, Thang said.

The group earned VND6.44 trillion ($253 million) and VND1.78 trillion ($70 million) in revenue and after-tax profit last year, up 26% and 58% year-on-year, respectively.

Fruit sales raked in respective revenue and gross profit of VND2.98 trillion ($117 million) and VND1.13 trillion ($44.4 million), with a gross profit margin of 37.8%. Apart from harvesting 7,000 hectares of banana, the group increased its durian cultivation area to 1,500 hectares by planting the fruit on an additional 500 hectares.

Thang reported that 2023 was a difficult year for the livestock industry, with market prices in free fall. Therefore, the company did not expand its barn system, focusing instead on reducing costs and improving product quality. As a result, this business was able to post revenues of VND1.96 trillion ($77 million) and a gross profit of VND65 billion ($2.55 million).

By the end of 2023, the group’s accumulated loss stood at VND1.67 trillion ($65.6 million); and its short-term debt exceeded short-term assets by VND941 billion ($37 million).

Answering shareholders' enquiries, chairman of HALG Doan Nguyen Duc said the leadership will strive to write off the accumulated loss by the end of this year. Once successful, a host of large funds and investors stand ready to invest in the group.

The group plans to launch an initial public offering of its livestock arm, Gia Lai Livestock JSC, if it manages to restructure the later. Duc boasted that Gia Lai Livestock, having charter capital of VND1.9 trillion ($74.64 million), owns a large land bank, durian and banana cultivations, and pig farms.

HAGL completed the issuance of 130 million shares in a private placement recently, raising VND1.3 trillion ($51 million), the AGM heard. The buyers were chairman of LPBank Securities Le Minh Tam, and other individuals from LPBank Securities and Thaigroup.

A group comprising LPBank Securities and individuals Le Minh Tam, Nguyen Duc Binh, Tran Thi Thu Phuong and Pham Le Thi Hong Hoa jointly became a major shareholder with a combined 89.6 million HAG shares, or 8.47% of its charter capital.

HAG closed Friday at VND13,200 ($0.52) a share.