INVESTMENT THESIS
Vinh Hoan Joint Stock Corporation (HSX: VHC) is a leading enterprise in farming, processing and exporting Pangasius, accounting for 15% of Vietnam’s Pangasius export turnover.
Revenue recovered in three consecutive quarters, after bottoming out in the fourth quarter of 2023. VHC’s net revenue and net profit in the third quarter of 2024 reached VND 3,278 billion (+21.5% YoY) and VND 321 billion (+68,2% YoY) respectively, marking the highest level since the beginning of the year.
- The Pangasius segment recorded a positive growth of 32.6% YoY, contributing 59.3% to total revenue at VND 1,912 billion.
- Driven by improved selling prices and stable low costs of animal feed and raw fish, the gross profit margin of the quarter rose by 17.7%, a significant growth compared to a 10.6% increase in the same period last year.=
Cumulatively, for the first 9 months of 2024, VHC recorded a net revenue of VND 9,329 billion (+22.1% YoY; 81.1% of the annual plan) and a net profit of VND 808 billion (-4.8% YoY; 80.8% of the annual plan).
Achieved 2024’s revenue target after 11 months. The cumulated revenue of the first 11 months of 2024 reached VND 11,458 billion, indicating an increase of 25% YoY and achieved 99.6% of the annual plan, primarily driven by robust growth in October 2024:
- In October 2024, sales revenue surged by 59.3% YoY and 29.7% MoM, reaching VND 1,206 billion. Key growth drivers included the strong performance in the Pangasius and by-products segments, contributing VND 755 billion and VND 159 billion, respectively. Both export and domestic markets witnessed strong growth during the period.
- Despite experiencing a decline in total revenue of 19.7% compared to the previous month, November 2024 still recorded a positive YoY growth of 13.2%, reaching VND 968 billion.
- In the first two months of the fourth quarter of 2024, exports to the US market demonstrated robust growth compared to last year's period, with a 93.5% YoY increase to VND 739 billion. This reflects a positive signal since the US market typically contributes over 30% of VHC’s revenue structure. Apart from domestic consumption, export revenue to other markets (excluding the US) in October and November 2024 also recorded double-digit growth compared to the same period last year.
Prospects:
- Vietnam’s leading Pangasius processing and exporting corporation, capturing 15% of the export market share
- Large-scale production with an integrated value chain, mitigating the impact of rising raw material costs
- Consistent annual cash dividend payout of 20% of par value (VND2,000/share)
- 2024’s net profit is forecasted to reach VND 1,143 billion (+24.7% YoY), equivalent to EPS of VND 5,105/share, driven by the recovery of consumption demand from (1) Year-end festive seasons; (2) Russia’s import restrictions on Western seafood; and (3) US Federal Reserve rate cuts stimulating economic activities.
RECOMMENDATION
OUTPERFORM recommendation with a 1-year target price of VND 80,600/share and an upside potential of 9.5%
