May 29, 2024

 

Live swine prices surge in Vietnam, boosting investor optimism

Live swine prices in Vietnam's domestic market have experienced a significant increase since the beginning of the year, raising investors' expectations for swine farming business profits, Vietnam News reported.

 

Statistics indicate that local live swine prices have risen about 30% since the start of 2024. Vietcombank Securities Company (VCBS) identified several primary factors contributing to this price surge. The limited pork supply in the northern region and the equilibrium of live swine prices across the three regions have led to weak swine transportation from the central and southern regions to the north.

 

Despite domestic swine prices being higher than those in Thailand, swine are not yet being imported into Vietnam from the neighbouring country.

 

During the General Meeting of Shareholders, Nguyen Nhu So, chairman of the Board of Directors of Dabaco Group, expressed expectations that swine prices will continue to rise, primarily due to a significant decline in supply compared to demand last year. He noted that it would take at least 18 months to overcome the supply shortage.

 

Given the higher price environment, many enterprises in the industry reported bullish changes in business activities. In the first quarter of 2024, Dabaco's net revenue reached over VND 3.25 trillion (US$127.6 million), marking a 40.6% growth year-on-year.

 

Despite a rise in the cost of goods sold, the swine farming enterprise in Bac Ninh province recorded a gross profit of VND 348 billion (US$13.6 million) during the same period, compared to a loss of over VND 70 billion (US$2.7 million) last year. After deducting expenses, its profit after tax was VND 72.6 billion (US$2.8 million), whereas it had a loss of VND 320.7 billion (US$12.5 million) in the same period last year.

 

BAF Vietnam Agriculture JSC also reported strong business performance, with a 58.2% increase in net revenue over last year to VND 1.29 trillion (US$50.6 million). The company's profit after tax was over VND 118.6 billion (US$4.6 million) in the first quarter, 30.4 times higher than the first quarter of 2023.

 

However, Hoàng Anh Gia Lai JSC (HAGL) has not benefited as much from the rising live swine prices. The company's swine segment generated less than VND 6 billion (US$235,000 million) in gross profit. In the first quarter, HAGL reported a net revenue of VND 1.24 trillion (US$48.7 million), down 27% year-on-year. Fruit sales constituted most of its revenues, amounting to VND 887 billion (US$34.8 million), experiencing a notable 25% increase. However, there was a significant drop of 48% in revenue from swine sales, reaching only VND 292 billion (US$11.4 million). The company attributed the delay in rebuilding its swine herd to the allocation of resources to other business areas since 2023.

 

On the stock market, shares of the three swine raising companies hit ceiling prices on May 27, 2024, and continued to rally at the beginning of this week. The surging momentum of livestock stocks has been recorded since mid-April. In just over a month, the stock prices of Dabaco (DBC), Hoàng Anh Gia Lai (HAGL), and BAF Vietnam Agriculture (BAF) have all increased by around 20%. Notably, DBC stock has reached its highest price in over a year, approaching the historical peak achieved in early March 2022. BAF is trading at a 21-month high, while HAG stock is at its highest level since the start of February.

 

Amid the upward trend in pork prices, numerous livestock enterprises have been intensifying their efforts to restock their herds, anticipating price increases throughout the year. Since the end of April, Dabaco has imported a new batch of breeding swine, transported to Vietnam by airplane. The expansion of the breeding swine population has led to the highest level of swine farming productivity in the company's 28-year history.

 

Despite a challenging disease situation last year, Dabaco imported 10,000 breeding swine. The Dabaco chairman said that without the initiative to import swine last year, the company could have faced a difficult situation this year. The company aims to expand the sow herd to approximately 90,000 heads and the fattening swine herd to about 1.5 million by 2025, or at the latest by 2026.

 

BAF has announced plans to swiftly launch seven additional farm projects. Of these, the Hai Dang farm cluster, consisting of 5,000 breeding sows and 60,000 fattening swine, the Tan Chau farm with 30,000 fattening swine, and the Tam Hung farm with 5,000 breeding sows, have already started operating as of March. The company also plans to initiate seven more projects in 2024, including six livestock farms and one animal feed production factory in Binh Dịnh Province. As a result, BAF aims to double its total herd size by the end of 2024, reaching 75,000 breeding sows and 800,000 fattening swine compared to last year.

 

Meanwhile, HAGL, although progressing at a slower pace, possesses advantages in terms of farm area and self-sufficiency in banana feed supply. It has resumed investing in expanding its herd, utilising existing infrastructure and farms. Products are expected to be available within the next four to five months. HAGL has significant ambitions for 2024. With the support of LPBank, HAGL anticipates recording profits starting at the end of this year. If pork prices remain favourable in 2025, the company is confident it will reap substantial benefits. HAGL is beginning herd expansion with the financial support of LPBank, including a loan of VND 300 billion (US$11.7 million) for increasing swine numbers, said Doan Nguyen Duc, the company's chairman.

 

-      Vietnam News