An 'tumbling year' of VN seafood enterprises, what are their expectations for 2021?

Stagnant exports, natural disasters affecting farming areas, together with Covid-19 epidemic, the selling price and output "intertwined" go down ... all difficulties forming a chain making seafood enterprises wobble in 2020.

According to VASEP, by the end of 2020, the total value of Vietnam's seafood exports reached 8.41 billion USD, down 1.9% YoY.

This is a great effort of seafood businesses in 2020. In which, pangasius export is 1.49 billion USD (down by 26%) and shrimp export value is 3.73 billion USD (up 11% YoY).

By 2020, both pangasius farmers and producers in Vietnam, China, and India ... will be affected to different degrees by the Covid-19 epidemic. Pangasius material prices in the Mekong Delta also fell below VND 20,000 / kg and the export value to some major markets such as China, Hong Kong, US, ASEAN and EU decreased compared to the previous year.

For shrimp, thanks to The government well controlled Covid-19 pandemi, Vietnam's shrimp production and export activities have more advantages compared to rival supply markets. Shrimp businesses try to both maintain production, flexibly change the market, take advantage of opportunities, so the value of exports to major markets grows positively such as the US up 33%, the EU up 6%, South Korea increased 3% and the UK 20% increase compared to 2019.

According to VietstockFinance data, as of February 2nd, 2021, there are 14 listed seafood enterprises that have generated nearly VND 39,823 billion in revenue and more than VND 1,723 billion in net profit in 2020, down 10% and 48% respectively compared to 2019.

 Cuu Long An Giang Seafood (HOSE [Hochiminh Stock Exchange]: ACL) is the unit with the strongest net profit in 2020 with the strongest drop in the industry, down 80% from the previous year, to 29 billion VND. Compared to the plan, ACL only achieved 71% of the revenue plan and 41% of the pre-tax profit plan. Notably, cash flow from operating activities was negative 218 billion, while the same period positive 5 billion.

Similarly, due to the influence of Covid-19, the selling price and revenue of Nam Viet (HOSE: ANV) decreased simultaneously. From there, the net profit of 2020 "slided" down to 202 billion dong. In 2020, ANV set up plan quite low compared to the figure made in 2019, so this seafood business has exceeded 15% of the revenue plan and 20% of the pre-tax profit plan of 2020. This is the only company in VN Pangasius industry carried out its business revenue exceeded the 2020 profit plan.

For the same reason, the top leading Pangasius processor, Vinh Hoan Corporation (HOSE: VHC) announced that 2020 net profit down to 40%, just reached to VND705 billion. Compared to the high plan, VHC only achieved 82% of the revenue plan and 66% of the after-tax profit plan in 2020. The EPS of this business also decreased from over 6,000 VND / share to nearly 3,900 VND / share.

More dramatically, for the second year in a row, the accumulated loss of Ngo Quyen Export Seafood Processing (HNX [Hanoi Stock Exchange]: NGC) to 31 billion dong (as of December 31, 2020). According to NGC, the reason is that the capital imbalance has not been overcome, causing the company's finance to fall into a shortage of working capital for production.

In addition, due to the heavy influence of the Covid-19 epidemic, it made the Company even more difficult when transactions with foreign customers were interrupted, there were no export orders, or import contracts [materials for re-export]. The production plan for both domestic and foreign customers is canceled, leading to failure to meet the goal of gradually bringing the factory back to operation in 2020.

Or the drop in export revenue is also the main reason why MeKong Seafood (HOSE: AAM) suffered a loss of nearly 12 billion dong, while the profit was over 8 billion dong in the same period.

Shrimp industry is a bit prosperous

Contrary to the gloomy atmosphere of the pangasius industry, shrimp businesses recorded an increase in revenue. Although the net profit indicator is approximately the previous year, reaching nearly 226 billion dong, but the revenue in 2020 of Sao Ta Food (HOSE: FMC) has reached 4,415 billion dong, a record high after 15 years of listing on the stock exchange.

According to Dr. Ho Quoc Luc - President of FMC (Fimex), Covid-19 has created a good opportunity for Vietnamese shrimp. The Vietnamese government has been very good at preventing Covid-19 from being broken in the economy. Safe farmed shrimp, production increased more than 2019, even if only one digit number. Meanwhile, the other major shrimp farming countries were severely affected by Covid-19, interrupted or broken the shrimp farming supply chain, so shrimp production in these countries decreased like India, Ecuador, Indonesia ... shrimp supply source reduced, then, consumption should be more favorable, however, Covid-19 also attacks labor income, so consumption prices are only at an average level.

Along with the shrimp, Camimex Group (HOSE: CMX) is the only enterprise representing the seafood industry group to report growth profit compared to the previous year. In which, net revenue and net profit increased 49% and 19% respectively over the same period, to nearly 1,417 billion VND and 49 billion VND.

The FTA will boost growth in 2021

According to VASEP, the fisheries sector still has opportunities from new generation FTAs such as the Regional Comprehensive Economic Partnership (RCEP), the EVFTA - Agreement (Free Trade Agreement between Vietnam and the Europe and most recently the FTA between Vietnam and the United Kingdom (UKVFTA) ... These FTAs are having a good impact on Vietnam's seafood exports, contributing to improving the competitiveness of seafood products in coming months.

With the positive factors from the opportunities that Vietnam can have and take advantage of, it is forecasted that Vietnam's seafood export in 2021 will increase by 10%, reaching over $ 9.4 billion. In which, shrimp export is still at the strongest growth rate, up 15%, reaching 4.4 billion USD, Pangasius will recover with an increase of 5%, reaching about 1.6 billion USD.

According to Mr. Tran Minh Canh - ANV CFO, EVFTA and RCEP agreements will generally contribute to boosting the growth of Vietnamese exports due to the advantage of exempting import tax for some industry.

For the RCEP, allowing member countries to pool originating materials across the bloc. This is an advantage over the current ASEAN FTAs, helping Vietnam to take advantage of the diversified supply of inputs throughout the bloc to export to partner countries in the bloc.

For EVFTA, frozen pangasius products will be gradually reduced to 0% tax according to a 4-year schedule. Before and until the EVFTA comes into effect for 2 years, Vietnam still enjoys preferential tax rates under the GSP (universal tariff preferences) mechanism. The difference between these two tariffs is really negligible, especially in the first year when the agreement comes into effect.

According to Dr. Ho Quoc Luc (Former President of VASEP, currently President of FMC), EVFTA has a huge impact on shrimp products, a golden opportunity for businesses that have prepared to welcome from a distance.

In addition, Mr. Luc also forecasts a number of challenges that businesses must experience in 2021. For shrimp, the internal challenge is that the authorities must be quicker in numbering [coding] farming areas, pond, a more open mechanism within the term to create large-scale farms, meeting the standards required by the markets (ASC, BAP). Thereby, Vietnamese shrimp has more opportunities to penetrate high-end consumption systems, with good consumption prices, creating a foundation to elevate Vietnamese shrimp.

For pangasius, information about the supply and demand situation is the prerequisite for the success or failure of pangasius. In order to have a plan to calculate the output, the area of the pond ... to avoid the imbalance in supply and demand. It is necessary to urgently improve the processing level, create more new products, and create convenience for consumers…. (VietStock, 22.Feb., Tien Tien)

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