We attended VNM’s online AGM on April 25. Our detailed takeaways are below.

Profitability trend: In Q1 2023, VNM’s earnings declined YoY (the decline percentage has not been disclosed) as material costs used for production in the quarter were higher YoY because Q1 2022 material costs benefited from the relatively low base in 2021. As of now, VNM has locked in input milk powder prices for production up to August 2023. Since Q2 2023, material costs have been relatively stable. Additionally, management expects to see improvement in GPM in Q2-Q3 2023. However, management does not expect VNM’s GPM to come back to the pre-COVID level this year.

VNM remains focused on its long-term efforts to increase its own fresh milk supply. Vinamilk received 2,500 purebred Holstein Friesian dairy cows imported from the US in July 2022. 1,000 of these cows went to the Lao-Jagro farming complex in Laos (for which the company secured 5,500 ha of land in Laos in 2019) and 1,500 went to the Green Farm eco-farm network in Vietnam. The cows increased VNM’s own dairy cow count to 36,500, in addition to ~110,000 cows owned by contracted farmers. Management expects the Lao-Jagro farm will receive an additional 7,000 cows in 2023.

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