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BCF - Maintain high profitability due to a diversified product mix

The diverse product mix and strong research and development capability help BCF's revenue stay at a satisfactory growth rate compared to many competitors in the food processing sector. As a result, BCF's profit margin and profitability ratio are always at a high level compared to peers. The trend of farmers shifting from food crops to fruit trees and aquaculture may adversely affect BCF's businesses related to traditional materials in the long term. However, we expect the diversification into other product groups (which bring higher profit) will compensate for this. In addition, a healthy financial situation with low and continuously declining leverage ratio along with abundant interest payment coverage is also a plus for the company.

In 2020, we believe that the company’s average selling price may decrease due to fierce competition, especially the price of shrimp chips and mixed flour. Products of high added value such as organic products and ready-to-eat/drink products will, however, continue to maintain attractive margins. Raw material prices may decrease slightly, helping to reduce pressure on input costs. Revenue is expected to increase slightly by 9.3% to VND 580 billion while the gross profit margin drops to 26.3% from 27.3% in 2019. Profit after tax comes at VND 69 billion, up 5.6% YoY, equivalent to an EPS of VND 3,749. We recommend MONITOR for this stock