Seafood firms expect a jump in profits as global demand recovers

[ASEAN NOW News]

Workers at a pangasius processing factory. Photo by VnExpress/Cuu Long

 

Major seafood producers expect a double- or triple-digit rise in profit this year on surging prices and recovering demand.

 

VN Express reported that Vinh Hoan Corporation, the largest listed seafood company, targets a 36.5-percent rise in profits to VND1.5 trillion ($65.6 million)

 

IDI International Development & Investment, the second largest, expects a sixfold increase in profits to VND900 billion.

 

The industry was hit hard over the last two years as Covid-19 dragged demand and supply down. Profits of the two company, therefore, dropped by 40-65 percent from 2019.

 

But they expect strong rebounds this year, with profits went up by at least 20 percent compared to the pre-pandemic year of 2019.

 

Many others also expect the recovery in global demand since the end of last year to have a huge impact on their bottom line.

 

Mekong Fisheries JSC expects pangasius to remain its top export item this year.

 

Sao Ta Foods JSC expects demand to rally further when the pandemic is brought under control in its import markets. It expects shrimps to be favored for their high nutritional value and ease of cooking.

 

Supply is likely to meet the burgeoning demand thanks to the expansion in farming area and the use of new technologies that help control and mitigate risks involved in shrimp farming, it added.

 

Shrimp and pangasius are expected to remain the main export earners since their prices have been driven up by a shortage even as demand has recovered.

 

The industry also expects to take advantage of trade deals like those with the EU (EVFTA) and the UK (UKVFTA).

 

Pangasius prices would remain high in the first half of the year due to limited supply, Yuanta Securities said.

 

The fish farming cycle lasts six months, and major producers were hit hard by Covid-19 in the second and third quarters of 2021, and so supply would start to recover in the second half of this year, it added.

 

But An Binh Securities warned of downside risks like surging feed and logistics costs and the fierce competition from other exporting countries like India, Ecuador, and Indonesia.

 

On the stock market, the seafood sector has posted gains over the last month, with some hitting the ceiling even during sharply declining sessions like on March 28.

 

On Wednesday Vinh Hoan traded at around VND96,000, up 37 percent since January.

 

IDI International Development & Investment has seen a 160 percent surge since the end of January, and hit a new peak of VND29,300 on Monday.

 

Sao Ta Foods also climbed to a record VND70,600 on Wednesday after gaining 48 percent.

 

Vietnam’s seafood exports grew by 40 percent year-on-year to US$2.4 billion in Q1 despite direct impacts of the ongoing Russia-Ukraine crisis.

 

The growth was led by shark catfish, whose exports increased by 88 percent to $646 million and accounted for 27 percent of overall exports, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

 

Shrimp remained the top export item, accounting for 37.5 percent of the total at over $900 million, up 37 percent.

 

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