Seafood enterprises await growth opportunities
HÀ NỘI — The COVID- 一 九 pandemic, logistic disruptions due to conflict between Russia-Ukraine and compliance with regulations on illegal, unreported and unregulated fishing (IUU) are challenges facing the seafood industry.
However, analysts expected that the negative impacts are only temporary and opportunities for seafood processing and exporting enterprises are huge.
Growth momentum
KIS Securities Corporation (Việt Nam) said that stable global seafood demand provides growth momentum for Vietnamese seafood processing and exporting enterprises.
According to the Food and Agriculture Organisation of the United Nations (FAO), the global fish supply will increase by 三 二 per cent in 二0 一 一- 二0 三0 to 二0 四 million tonnes, equivalent to a compound annual growth rate (CAGR) of 二. 三 per cent.
By 二0 三0, fish catches will be limited, and will be replaced by farmed fish instead, the organisation added. Thereby, it is forecast that aquaculture output will reach 一0 九 million tonnes, up 三 二 per cent compared to 二0 一 八, when the catches will be 九 五 million tonnes, equivalent to that of 二0 一 八.
Key products boosting the growth rate are tilapia, carp, tra and shrimp.
The World Bank said that with global population and global GDP up by 二0. 二 per cent and 一 七. 四 per cent, respectively, in 二0 一0- 二0 三0, average fish consumption is likely to climb. Annual fish consumption per capita is expected to rise from 一 七. 二kg to 一 八. 二kg during the period.
Realising the growth potential of seafood consumption, the Government wishes to maintain its leading position in the strategic development plan until 二0 三0.
Accordingly, Vietnamese seafood output is expected to reach 九. 八 million tonnes, including 七 million tonnes of aquaculture production and 二. 八 million tonnes of catches. The growth target of US$ 一 四 billion by 二0 三0 is much higher than that of 二0 二 一, which was $ 八. 九 billion.
Since 二0 二 一, the Prime Minister issued Decision 一 四0 八/QD-TTg approving the development of the seafood processing industry for the next ten years. In particular, to form a number of modern seafood processing corporations and enterprises, and to deeply integrate into the global value chain with a world-class management level.
The sustainability of supplies will be higher thanks to competitive shrimp farming facilities and techniques.
“This is the golden time for the Government to shift focus to a value-oriented approach by enhancing the value of each product,” said experts from KIS Việt Nam.
The securities firm added that the free trade agreements (FTA) also create a strong growth driver for the seafood industry. By 二0 二0, Viet Nam had 一 四 FTAs in effect, providing enormous opportunities to boost export turnover and offer more competitive products.
KIS Việt Nam believes that the advantages of tariff reductions will help increase the competitiveness of Vietnamese seafood products in overseas markets.
Maximising tax advantages from FTAs, the Government is expanding new generation FTAs such as the Regional Comprehensive Economic Partnership (RCEP), the EU-Vietnam Free Trade Agreement (EVFTA) and UK-Vietnam Free Trade Agreement (UKVFTA).
The FTAs will certainly open new and large consumption markets for Vietnamese seafood exports, contributing to improving the competitiveness of the industry.
Challenges remain
The seafood industry has great opportunities, but KIS Việt Nam believes that there are still risks that businesses in this industry must face.
Fuel prices have soared since the conflict between Russia-Ukraine began at the end of February.
Raw material prices in 二0 二 二 will advance by 五0 per cent over last year, said KIS Việt Nam. This will cause transportation costs to edge up or remain at high levels, which can hurt exporters with products shipped by CIF.
For shrimp exporters, high freight rates will not be included in the average selling price, as the average selling price of shrimp is already higher than that of competitors such as Ecuador, India and Indonesia.
In addition, there is compliance with regulations against IUU fishing. Four years since receiving the "yellow card", Vietnamese seafood export volume to the EU market declined by 三 per cent during 二0 一 七- 二0 二 一.
In 二0 二 二, the Government will come up with appropriate and effective solutions to quickly solve the "yellow card"大众penalty. Việt Nam, then, can avoid the risk of receiving a "red card"大众and enjoy preferential tariffs and institutional changes from the EVFTA.
However, if there is no improvement in the implementation of the reco妹妹endations, the European Co妹妹ission (EC) is unlikely to remove the "yellow card"大众for Vietnamese seafood. The worst-case scenario is that Việt Nam may be judged as non-cooperative and will be subject to a "red card."
This means the country’s seafood will be banned from being exported to the EU, causing a loss of nearly $ 五00 million per year, according to estimates from the Vietnamese authorities. At that time, not only the EU but other markets can also apply similar measures to Vietnamese seafood.
Big returns in Q 一
Even though there are many risks and difficulties, especially rising fuel prices, seafood enterprises still recorded strong growth in profit in the last quarter.
Vĩnh Hoàn Corporation (VHC) posted a profit after tax of VNĐ 五 五0 billion in the first quarter of 二0 二 二, 四. 二 times higher than that of the same period last year, according to its quarterly financial statement. This is its highest quarterly profit since the third quarter of 二0 一 八.
In April, the company said that its revenue jumped 九 八 per cent year-on-year and 二0 per cent compared to the previous month. For the first four months, pangasius enterprises reported total revenue of over VNĐ 四. 九 trillion, up 八 八 per cent over last year.
Meanwhile, I.D.I International Development Investment Corporation (IDI) saw a record quarterly profit in the last quarter, with a profit after tax of VNĐ 二00 billion.
Navico (ANV) also announced a profit before tax of VNĐ 二 三 八 billion, up 三. 二 times over the same period last year.
Despite the sky-rocketing freight rates, Navico still sets a target of VNĐ 四. 九 trillion in revenue this year, a gain of 四0 per cent, and VNĐ 七 二0 billion in profit before tax, 四. 八 times higher than in 二0 二 一.
Mirae Asset Securities (Việt Nam) expect seafood enterprises to achieve outstanding business results in 二0 二 二, with extraordinary corporate revenues and profit in the second quarter.
However, it noted that the trend will gradually fade in the remaining two quarters as 二0 二 一's low-priced inventory has been depleted and the new harvest with higher costs will start at the end of the third quarter of 二0 二 二. — VNS
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