Analyst Pin-board FMC – New factories likely to drive profits stronger than expected
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· We revise our TP by 14% from the latest valuation to VND 69,500, implying an expected return (including cash dividend yield) of 15%. Our increased target price is driven by: (1) a 21% upward revision in 2022F-2026F NPAT-MI as we increase our projected shrimp export volume and gross margin; (2) raising 2022 target PER from 10.5x to 12.0x due to improving long-term NPAT growth outlook and the current growth cycle of the seafood industry. We have an ACCUMULATE rating for this stock. · In 2M-2022, FMC’s export revenue grew strongly by 70% YoY, mainly driven by high shrimp demand and the contribution of Tam An factory. · In 2022, we forecast FMC’s revenue and NPAT-MI to be VND 6,551 Bn (or USD 285 Mn, +26% YoY) and VND 360 Bn (or USD 16 Mn, +35% YoY). We believe that a double-digit NPAT growth will be seen in 2022 due to the contribution of two new factories. Our upside risk is better-than-expected new factory capacity while downside risk comes from cooling-down global shrimp demand, higher logistics costs and increasing raw material prices. |
Sao Ta Foods Joint Stock Company is a Vietnam-based company active in the food processing industry. The Company is engaged in the processing, trading and export of seafood products, as well as the management of aquaculture farms to supply its own operations. Apart from processed shrimps and pangasius, it also manufactures other food products from garlic, ginger, fruit, sweet potatoes, lotus roots, lotus seeds, pumpkins, onion and others. It is also involved in the distribution of raw agricultural and aquatic materials, together with the import of machinery and supplies for food processing activities. In addition, the Company is engaged in real estate operations and hotel operations. During the year ended December 31, 2012, 97.68% of its total revenue came from export sales.
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