Stock Market

VHC – Positive Signals Emerge (Part 1)

Vinh Hoan Corporation (HOSE: VHC) is a leading catfish farming, production, and export company. After a tumultuous and challenging 2023, the catfish export industry started to show positive signs in 2024, presenting an opportunity for VHC to overcome obstacles and reinforce its pioneering position.

Administrator

28 August, 2024

Vietnam’s Seafood Industry Sees Positive Signals

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood exports in the first seven months of 2024 are estimated to reach $5.28 billion, a 7% increase compared to the same period in 2023. Notably, tra fish exports reached nearly $1.09 billion, a 7.7% year-on-year increase.

Vietnam’s Seafood Export Turnover for 2019-7M2024

(Unit: Million USD)

Source: VASEP

For 2024, VASEP predicts a gradual recovery in Vietnam’s seafood exports, with a more optimistic outlook in the second half. Major export markets have shown positive signals in both demand and import prices. Seafood export turnover is expected to rebound to $9.5 – 10 billion, representing a 6 – 11% increase year-on-year, including tra fish exports of approximately $1.8 billion.

The US, EU, and China are the largest consumers of Vietnamese tra fish. According to Vietnam Customs, tra fish exports to the US in the first half of 2024 reached nearly $160 million, a 14% increase compared to the same period last year.

Vietnamese tra fish enterprises, particularly those with the largest export share in the US market, such as VHC, will benefit from the recovering consumption demand and the US market growth in the coming periods.

Market Structure of Vietnam’s Tra Fish Exports in 6M2024

Source: VASEP

Leading the Way

VHC has maintained its leading position in the tra fish industry throughout its 25-year journey. As of the end of 2023, VHC accounted for 13% of Vietnam’s total tra fish export value, significantly ahead of the second and third positions (ANV with 6% and IDI with 5%). Notably, VHC is the top exporter in key markets: the US (46%), EU (22%), Canada (29%), and Australia (32%).

Top 5 Vietnamese Tra Fish Exporters in 2023

Source: VASEP and VHC Annual Report

Striking Gold

Tensions in the Middle East since the beginning of 2024 have significantly increased logistics costs for exports to the EU. According to Standard & Poor’s calculations, the voyage from ASEAN (specifically Singapore) to the EU has increased by nearly 40% when not passing through the Suez Canal.

Typical Sea Routes from ASEAN to the EU

Source: Standard & Poor’sp>

In early August 2024, the US Department of Commerce decided not to recognize Vietnam as a market economy country, despite its positive developments. Consequently, Vietnamese exporters to the US market will continue to face discrimination in anti-dumping and countervailing duty investigations, and their actual production costs will not be recognized. Instead, a “surrogate” value from a third country will be used to calculate the dumping margin.

Currently, VHC enjoys a 0% tax rate when exporting to the US market under POR19, issued in March 2024. However, from a corporate governance perspective, market diversification is essential.

In the first seven months of 2024, domestic market revenue increased significantly by 33.7%, reaching VND 2,035 billion, almost equivalent to the US market. Other markets, excluding the top three of the US, EU, and China, also witnessed impressive growth of 46.1%, with total revenue of nearly VND 1,000 billion. VHC‘s leadership seems to have struck gold by balancing domestic and export markets and expanding its export customer portfolio, as evident from the revenue statistics.

(*) Note: POR19 refers to the Final Conclusion of the 19th Administrative Review of the Anti-dumping Duty on Frozen Tra Fish Fillets from Vietnam exported to the US.

VHC’s Revenue Growth by Market for 7M2024

(Unit: Billion VND)