press and analyst meeting q2/2017 - vinh...

07/21/017

PRESS AND ANALYST

MEETING Q2/2017

Contents

Sales Report Q2/2017

Financial Results Q2/2017

Outlook for 2H2017

Q&A

2

1. Sales report Q2/2017

3

1. SALES REPORT Q2/2017 | MARKET SHARE

Accounts for 16% share of Vietnam pangasius exports, sustaining the leading

position

4

Vinh Hoan Group16%

Hung Vuong Group11%

Hung Ca Group8%

Biển Đông8%

Nam Việt Group5%

IDI5%

Đại Thành Group3%

Gò Đàng Group

3%

Trường Giang3%

Cadovimex II3%

190 công ty khác35%

Top 10 Vietnam pangasius exporters 1H2017

Source: Vietnam Customs

1. SALES REPORT Q2/2017 | EXPORT VALUE

1H17 sales slightly increased by 2% yoy, in which Q2 alone up 12% yoy, mostly

contributed by sales growth in Apr and June

5

Source: Vinh Hoan

24.46

17.56

21.2719.28

28.57 28.85

17.69 17.65

21.25

25.5227.50

33.03

Jan Feb Mar Apr May Jun

Monthly exports value

Export value 2016 (USDm) Export value 2017 (USDm)

+32%

+14%

1. SALES REPORT Q2/2017 | PRODUCTS

Strong growth of value-added products (338%), Collagen & Gelatin (309%)

6

Value-added products3%

Collagen & Gelatin1%

Pangasius86%

Fishmeal & Fish oil

8%

Others2%

Export value breakdown by product segments

1H2017:

USD142.65m

1.09

0.47

126.91

9.10

2.42

4.77

1.92

122.15

10.56

3.25

Value-addedproducts

Collagen & Gelatin

Pangasius

Fishmeal & Fish oil

Others

Export value by product segments1H17 vs 1H16

1H2016 (USDm) 1H2017 (USDm)

Source: Vinh Hoan


7Collagen & Gelatin

Breaded

Grilled

Marinated


Exponential growth of marinated products (1H17 sales rose > 3-fold vs 2016)

8

Source: Vinh Hoan

809.46

2,410.19

456.41

3,062.52

1,232.98

121.59

351.83

Marinated

Breaded

Grilled (*)

Others

Export value of value-added products (USD ‘000)

2016A 1H17A

(*): Commercial sales of grilled pangasius fillets started in early 2017

22%

66%

0%

12%

64%

26%

3%7%

Breakdown of value-added products

Marinated Breaded Grilled (*) Others

2016: USD3.68m

1H17: USD4.77m


Collagen and gelatin surged by 338% yoy, gaining more new customers and

markets in 1H17

9

China

Developed broad network

of new customersIndia

Finished import

procedures

Gelatin sales grew fast

with many big customers

Europe

Stable purchases from

existing customers but slow

growth in market

development

Japan

Sales grew strong and

reached many prospects

South Korea

1. SALES REPORT Q2/2017 | MARKETS

New markets saw stronger growth than traditional markets

10

59%

8% 6% 5% 4% 3% 3% 3% 2% 2%5%

65%

8%5% 5% 4% 3% 3% 2% 1% 2% 3%

USA UK China Canada Belgium Hong Kong Australia Mexico Japan Netherlands Others

Market breakdown 1H17 vs 1H16

1H17 1H16

- 8%

+23% +35% +105% +109%

Source: Vietnam Customs

2. Financial results Q2/2017

11

2. FINANCIAL RESULTS Q2/2017 | CONSOLIDATED P&L

12

1H2017 1H2016 Change (%)

(VND bn)

Net Revenue 3,970 3,681 8%

Cost of Goods Sold -3,430 -3,076 12%

Gross Profit 540 605 -11%

Gros Margin (%) 14% 16%

Financial Income 24 28 -14%

Financial Expenses -48 -56 -14%

Selling, General and Administrative Expenses -221 -197 12%

Operating Profit, EBIT 296 382 -23%

Other profit (losses) -4 -1 406%

Pre-tax Profit 292 381 -23%

After-tax Profit 235 325 -28%

Earnings before interest, Tax, Depreciation and

Amortization (EBITDA)421 478 -12%

EBITDA Margin (%) 11% 13%

Net Profit Margin (%) 6% 9%

3. Outlook 2H2017

13

3. OUTLOOK 2H2017 | VIETNAM PANGASIUS INDUSTRY

14

Expanding official

trade value and

narrowing cross-

border trade

Increasing average

selling price in the

US

$

3. OUTLOOK 2H2017 | VINH HOAN

15

Sales from grilled

pangasius fillets

expected to rise by 5-

fold in 2H17 vs 1H17

From September, the

nursery phase for

newly-expanded

farming area of 220ha

will commence

20% yoy growth

forecast in Q3’s

export value

20% 5

4. Q&A

16

For further information, contact us at: [email protected]

Question 1: What caused decline in Q2’s net profit margin?

Due to increasing depreciation costs and raw materials price (over selling price). Q2’s raw materials price went up by 5%

yoy and down 5% vs Q1/17.

Question 2: Current raw materials self-supply ratio?

With the current farming area of 500 ha (in which pangasius’ area is 405 ha), and an additional 220 ha expanded in 1H17,

we can self supply around 60% of the raw materials required for production. In the long run, we target a ratio of 70-80%

Question 3: How is the market development progress in China?

Currently, Vietnam is exporting 70% of its pangasius to China via cross-border channel, the remaining 30% via official

channel.

Vinh Hoan only exports via the latter channel.

Recently China government has exerted tighter control over the cross-border trading, which will translate to a downsizing in

this channel and larger room for those trading in official channel.

The demand from Chinese customers are huge: in 1H16 they are still ranked 3rd among top exporting countries of Vietnam

pangasius, but they have made into 1st in the list in 1H17, accounting for c.17% of total Vietnam’s export value.

Question 4: Forecast sales to China in 2017?

China is expected to account for 9% of our total sales in 2017.

Question 5: Potential impacts of the Catfish Inspection Program (CFP) on exports to the US in 2H17?

Vinh Hoan has coordinated with our clients and i-houses (official import inspection establishment approved by FSIS) to

register for the inspection. Vinh Hoan’s customers are also applying for FSIS’s approval of their own storages as i-houses

to mitigate the transportation and storage costs. In the initial months when CFP goes into full effect, certain delays are

expected.

Question 6: In the case if a certain company faces a warning or rejection from FSIS, how would that impact other

companies export to the US? No such domino effect assumed, the warning or rejection only applies to that individual

company.


Question 7: The difference between inspection process of FDA and FSIS?

Difference in inspection scope:

FDA inspected around 1-2% of the Siluriformes fish shipments to the US, while starting Aug 02, 2017, FSIS will inspect

100% of the Siluriformes fish shipments to the US.

Question 7: Raw materials price trend?

Due to unfavorable weather conditions (e.g. low temperature, extending rainy season), the raw materials pricing may go

upward again in the coming months.

Question 8: Profit forecast for 2H17?

Q3’s average selling price: expected 5% increase vs Q2/17

Since the raw material costs made up 70% of the COGS, if there is no significant change in Q3’s raw materials pricing, we

target a 5-10% increase in Q3’s profit vs Q2/17, Q3’s gross margin at c.16%, Q3’s profit at c.VND170billion and Q4’s profit

at c.USD190billion

Question 9: Target for value-added products in 2017 and 2018?

Approximately USD15million in 2017 and USD25million in 2018

Question 10: The environmental risk on Vietnam’s pangasius industry? Vietnam pangasius is one of the fish with the

most certifications in the world; GAP, BAP, ASC to name some. For customers who place environmental concern their first

priority, Vinh Hoan is able to meet their orders with certified supply in the long term.

Question 11: Revenue and profit of the subsidiary Thanh Binh in 1H17?

Operations at workshop No.1 of Thanh Binh is on track, with normal capacity of 100-120MT (of raw materials) per day. In

1H17, the revenue reached 33% of the target, and we forecast a higher result in 2H17.

Question 12: What is the sales strategy for domestic market?

At the moment, the logistics and storage system for frozen seafood products in Vietnam is not fully developed. When the

system catches up, we will consider expanding the domestic sales

Question 13: Export markets of value-added products?

The EU, Japan, China, the US, Canada


Disclaimer:All information and responses implying forecast or prediction for future events/data in this material is subject to Vinh Hoan’s opinion and only serve as

a reference source. It should not be taken as an investment recommendation. Vinh Hoan will not be held responsible in any way for investment

decision made based on our forecast/prediction presented in this material.

Thank you

press and analyst meeting q2/2017 - vinh...

Documents