Shares of agribusiness companies see strong growth

The first group that can be mentioned is sugar stocks. From the beginning of this year, shares of Thanh Thanh Cong – Bien Hoa Joint Stock Company (SBT) increased by more than 10 percent, Quang Ngai Sugar (QNS) rose by 23.6 percent, Son La Sugar (SLS) gained by more than 32.5 percent, Kon Tum Sugar (KTS) increased by 77.4 percent, and Lam Son Sugar Joint Stock Corporation (LSS) even increased by more than 90.4 percent.

The growth of sugar stocks was attributed to rising sugar prices. Sugar prices have skyrocketed to their highest levels in more than a decade as concerns about tight global supply are weighing on global food security.

In the sugar industry outlook update report, VNDIRECT Securities Joint Stock Company (VNDIRECT) expects sugar prices to remain high in 2023.

According to market research group Euromonitor International, sugar demand is forecast to increase by 1.7 percent year-on-year in 2022. Meanwhile, according to the Vietnam Sugar Association (VSSA), processed sugarcane output is expected to reach 8.7 million tonnes, up 16.5 percent year-on-year against 2022, and sugar production reached 870,930 tonnes, up 16.6 percent year-on-year compared to 2022.

Trade remedies measures will have a more obvious effect than in 2022, leading to a decrease in the amount of imported sugar while the inventory of cheap imported sugar in 2022 is gradually decreasing. Therefore, the price of imported sugar into Vietnam will continue to increase in 2023. However, imported sugar still accounts for about 70 percent of the total supply, thus smuggled sugar will still put competitive pressure on domestic sugar prices, says VNDIRECT.

Shares of rice companies have also increased strongly since the beginning of this year. Specifically, Trung An Hi-Tech Farming JSC (TAR) increased by nearly 33 percent, Loc Troi Group Joint Stock Company (LTG) rose by more than 18 percent, and The PAN Group JSC (PAN) gained by nearly 16 percent.

For the rice industry, VNDIRECT estimates that the world rice demand will remain high in 2023 due to political and economic uncertainties along with unresolved conflicts between Russia and Ukraine, pushing up the demand for reserves. Rice export prices are expected to continue to increase in 2023.

According to the General Statistics Office, in May 2023, the total export value of agricultural products remained stable at a high level of US$2.1 billion, up 2 percent from the previous month and up 19 percent over the same period last year. Rice was still the export item with the highest value with $530 million, up 37 percent over the same period last year and accounting for 25 percent of total agricultural export turnover.

KIS Vietnam Securities Joint Stock Company (KIS) says that many countries such as China, Indonesia and the Philippines increased rice imports to compensate for their national food reserves. KIS predicts that rice export turnover will increase slightly in the second quarter of 2023 compared to the first quarter of the year.

In addition, lower fertilizer prices and the recovery of wheat and corn supplies in Ukraine, combined with lower oil prices, could help improve the net profit margin of crop producers in the second quarter of 2023.

As for the livestock sector, within the past month, this sector witnessed recoveries in stock prices, attracting strong cash flow. Specifically, from the beginning of May, Hoang Anh Gia Lai (HAG) shares increased slightly by 6.5 percent, BaF Vietnam Agriculture JSC (BAF) rose by 11.3 percent, and Dabaco Group (DBC) gained by 35.6 percent.

The price of feed ingredients gradually cooled down and the expectation of a reduction in the feed tax also opened up the prospect of profit growth for livestock enterprises, positively affecting the stocks of this industry group.

VNDIRECT says that the cooling of feed material prices, along with the recovering trend of pork prices, will create favorable conditions for meat producers in production and business. These companies will record more positive earning results from 2023.

For seafood businesses, SSI Securities Joint Stock Company (SSI) says that the reopening of China is expected to be a catalyst for the seafood industry in 2023, but more time is needed to assess the specific impact. The pangasius industry is expected to benefit the most, as China is Vietnam's largest pangasius export market. 

Source: VNS