Tracking the trend of rice stocks

However, not all rice stocks will grow as a result of the aforementioned knowledge. To avoid risks, investors must do meticulous screening.

Export rice enterprises reap profits

Since the beginning of 2023, the average price of rice exports has been steadily growing. In example, the average rice export price for Vietnam reached about $552 per ton in June, representing a 9% rise over the beginning of the year and the greatest level in the rice industry's history. Because of rising demand from key countries such as the Philippines, China, Indonesia, and India, the export rice market has become more dynamic.

This fact has resulted in rice firms' best-ever business success in the first six months of 2023. The CP Lc Tri Group (LTG) is the industry's most prominent highlight, as this "big player" reported Q2 net sales of 3,678 billion VND, a 4% rise over the same period last year. LTG made an after-tax profit of over 425 billion VND thanks to a profit in joint venture and linked enterprises of nearly 327 billion VND, compared to a loss of more than 44 billion VND during the same period previous year. This is also a record profit for the quarter in the company's history.

The Southern Food Corporation (VSF) comes next. VSF's revenue in the second quarter was 6,867 billion VND, a 57% increase over the same period previous year. Despite a profit of less than 10 billion VND, it is more than double that of the same time last year and a substantial boost to VSF's performance for the first six months of this year.

The High-Tech Agriculture Corporation Trung An (TAR) had the most outstanding revenue increase in Q2 2023, with revenue of 1,615 billion VND, more than double that of the same time last year. However, the expense burden forced TAR to incur a post-tax loss of roughly 8 billion VND...

Opportunities for the rice industry

Many securities firms assessed in a recent update report that the Vietnamese rice sector is experiencing numerous advantageous situations, such as a scarcity of global grain supply, damage to rice production regions in many countries due to drought, and rising rice prices due to the existence of El Nino. The prospect of continuing rice export price increases in the second half of 2023 is considered as good news for rice sector firms.

Due to the protracted drought, China is likely to import an additional 6 million tons of rice in the 2023-2024 harvest. Furthermore, declining reserves in the Philippines have resulted in increased rice imports. According to the USDA, the Philippines will require an additional 2.8 million tons of imports for the next harvest. In addition, the Indonesian government has declared intentions to import 2 million tons of rice this year to bolster national stocks. India, in particular, has no intentions to abolish the prohibition on exporting premium rice and would decrease white rice tariffs by 20% in order to contain local price hikes.

The International Grains Council (IGC) continues to estimate that Vietnam's rice output in 2023 would exceed Thailand's number of 20 million tons... In the latter months of 2023, despite rising international rice demand, this is the "door of opportunity" for rice firms.

What stocks to pick?

Experts suggest that the following rice stock shares may be of interest to investors among the listed rice export companies:

First and foremost, LTG inventory. China is also a significant export market for LTG. The reopening of China's market will boost LTG's income further. Furthermore, LTG's merger with Lc Nhân Grain Corporation is projected to expand its grain sector capacity. LTG is expected to generate 14,028 billion VND in sales and 465 billion VND in after-tax profit in 2023, representing a 20% and 13% increase over 2022.

The current share price of LTG is 38,300 VND. Investors could consider purchasing LTG stock when it falls below 35,000 VND per share, with a target price of 40,000 - 42,000 VND per share.

Second, there's TAR stock. TAR's rice export fraction now represents for 15% of total income, with China being its primary rice export market. TAR will profit from lower Chinese output, which will result in greater rice imports from Vietnam. TAR is expected to earn 3,994.14 billion VND in revenue and 79.88 billion VND in after-tax profit in 2023, an increase of 5.1% and 13.9%, respectively.

The TAR stock is now trading at roughly 21,300 VND per share. Investors might consider purchasing TAR stock when it falls to 19,000 - 20,000 VND per share and holding it until it reaches a target price of 22,000 - 25,000 VND per share.

Third, the PAN Group's stock. The last six months of the year are the busiest for all of the company's business segments. The rice business segment's business performance increased dramatically in the first six months of the year, with a 15% increase in revenue and a spectacular 50% increase in gross profit. This will continue to be a growth engine for PAN in the latter six months of the year.

PAN stock is now selling at roughly 22,950 VND per share. Investors might consider purchasing PAN stock at approximately 21,000 VND per share and exiting when the stock achieves a target price of around 25,000 VND per share...