VHC – Weak selling prices continue, earnings decline 16% YoY in Q1

VHC announced Q1 2024 results with revenue of VND2.9tn (USD114mn; +29% YoY) and NPAT-MI of VND170bn (USD7mn; -23% YoY), fulfilling 23% and 10% of our respective full-year forecasts. As earnings trailed our projections, we see a downside risk to our forecasts, pending a more comprehensive review.
In Q1 2024, VHC’s revenue grew 29% YoY which was mainly led by a 24% YoY increase in sales of frozen pangasius filets and related products (e.g., breaded fish, fish fat, fish meal, and feed) together with 34% YoY growth in sales of collagen and gelatin (C&G). In our estimate based on Agromonitor’s data, VHC experienced a 46% YoY surge in pangasius filet export volume which was offset by a 20% YoY decrease in export prices. As a result, GPM contracted 8 ppts chiefly due to weak selling prices.
Regarding export markets, VHC’s sales turned positive growth across key markets, including US (+2% YoY), Europe (+10% YoY), and China (+50% YoY). The domestic market made the largest contribution to revenue in Q1 2024 (29% of total Q1 revenue).

VHC’s Q1 2024 results

VND bn	Q1 2023	Q1 2024	YoY	QoQ	Q1 2024/ 2024F
Net revenue	2,222	2,856	29%	19%	23%
*By market
- US	707	723	2%	23%
- Europe	505	553	10%	33%
- China & Hong Kong	226	339	50%	56%
- Others	250	629	152%	4%
- Vietnam	558	807	45%	-1%
*By product
- Collagen & gelatin	178	238	34%	11%
- Frozen filets & others	2,070	2,572	24%	25%
- Rice products	108	176	63%	17%
Gross profit	384	266	-31%	36%	11%
EBIT	265	134	-49%	186%	8%
PBT	260	217	-17%	120%	11%
NPAT-MI	219	170	-23%	256%	10%
Gross margin	17.3%	9.3%
SG&A expenses/revenue	5.4%	4.6%
EBIT margin	11.9%	4.7%
NPAT-MI margin	9.9%	5.9%

Source: VHC, Vietcap’s forecast (*Revenue breakdowns by market and product are based on VHC’s preliminary results, of which the total revenue figure is slightly different from the official number)