What challenges for ANV?

>> Challenges remain for Vietnam’s aquaculture exports: official

Shady business performance

According to the consolidated financial report for 1Q24, ANV's net revenue decreased by 12% to VND 1,016 billion. ANV's gross profit of more than VND 101 billion was just half of that of the same period last year, with a gross profit margin of 10%, compared to 18% for the same period last year.

Its financial revenue fell by 42% to VND 5.2 billion, mostly owing to an 88% fall in interest on time deposits to VDS 756 million. On the contrary, exchange rate discrepancies and late-payment interest soared by 40% and more than doubled from the same period previous year.

Financial expenses fell by 32% to VND 24.6 billion, with borrowing costs accounting for the majority (VND 22.4 billion), a 31% decrease from the same time previous year.

As a consequence, ANV had a net profit of VND 17 billion, down 82% from the same time previous year. ANV has only reached 5.6% of their net profit target of VND 306 billion for 2024.

ANV's total assets as of March 31, 2024 are fixed at VND 5.062 billion, down about 1% from early 2024. As a manufacturing company, ANV's inventory represents over half of its total assets. ANV's inventory value reached VND 2.325 billion by the end of the first quarter of 2024. Due to low demand in export markets, there are large inventories of finished goods and raw materials. In 2023, ANV's export value was just $112.5 million (a 10.3% decline). Due to the slow recovery of exports, ANV is not expanding its deployment of aquaculture development projects, the largest of which is the 600-hectare tra fish farming project in Binh Phu.

>> Vietnam targets 2 billion USD in tra fish exports in 2024

Prospects for business

According to VASEP, Vietnam's tra fish exports were $165 million in January 2024, nearly tripling from the same month previous year. However, as of February 2024, total fish exports were only $90 million, a 32% decrease, and in March 2024, they were $168 million, a 12% decline from the same time in 2023.
In terms of export markets, China and Hong Kong (China) continue to be the top consumer markets for Vietnamese trade, despite a severe fall in export quantities. Tra fish shipments to China decreased 22% in March alone, with an average price of $1.94/kg, a 1.5% decrease from the end of 2023.

However, FPTS predicts that the enlarged client base, together with the potential of rebounding demand in China in the near future, would boost ANV's revenue from this market to positive growth in 2024, reaching VND 1,482 billion, a 26% increase over 2023.

The second-largest export market for Vietnamese tra fish, the United States, also saw a dip. In February 2024, Vietnam's tra fish exports to the United States were $16 million, an 8% decline from February 2023. Tra fish shipments to the United States remained marginally lower in March 2024 than in February 2023. Nonetheless, the United States Department of Commerce (DOC) has reduced preliminary anti-dumping tariffs on Vietnamese pangasius imports to $0 per kilogram. As a result, FPTS anticipates DOC's move to provide a favorable platform for ANV to continue boosting exports to the US market in light of the US's demand recovery in the last months of 2024, with revenue estimated to reach VND 348 billion, a 37% increase over 2023.

According to the FPTS, the supply of tra fish may tighten in 2023 due to low raw material prices, which, along with a greater recovery in tra fish demand, would result in a deficit in the supply-demand balance in 2H24. This gap will help ANV restore its average sales price and gross profit margin. As a result, ANV's average sales price and gross profit margin in 2024 may be $2.3/kg, up 5% and 17.8%, respectively.
Many analysts, however, believe ANV will continue to confront numerous obstacles because demand for tra fish in its primary export destinations in the early months of 2024 remains low. If import demand in these regions does not improve in the second half of 2024, ANV will face significant challenges.

To address this difficulty, many experts believe ANV should continue to pursue its goal of switching to high-tech value-added goods like collagen and gelatin. So far, ANV is the second firm in Vietnam to create collagen and gelatin from tra fish skin, following VHC. The joint venture between ANV and Amicogen is now conducting phase 1 testing, with a processing capacity of 780 tons per year. They want to increase capacity to 1,200 - 2,400 tons per year in stages 2 and 3. When this project's capacity is reached, it is estimated to earn $36 million in revenue and $1.5 million in profit every year. Collagen and gelatin products are predicted to account for 10% of ANV's revenue by 2025.