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VHC - Export volume remains the key driver of growth momentum

Using a combination of DCF and SoTP methods, with a 50:50 weighting, we estimate a long- term price for VHC at VND 73,300, corresponding to a projected P/E ratio of 13.7x and 10.3x for 2024 - 2025, respectively. Along with a cash dividend of VND 2,000 / share, the total expected return is 2%. However, the stock could be valued higher with a greater risk tolerance.
• Revenue and NPAT-MI are expected to sustain growth momentum. We project revenue to rise from VND 10,076 billion in 2023 to VND 17,238 billion in 2028, reflecting a CAGR of 11.3%). NPAT-MI is expected to increase from VND 918 billion in 2023 to VND 2,325 billion in 2028, equating to a CAGR of 20%.
• The pangasius segment is expected to continue its growth trajectory. Revenue from pangasius fillet sales is projected to increase from VND 5,647 billion in 2023 to VND 8,507 billion in 2028, reflecting a CAGR of 8.5%, driven by export volume growth from 75,000 tons to 112,000 tons by 2028, with a CAGR of 8.6%. Although the average selling price may not see compounded growth during this period, it is expected to rise from USD 2.84 / kg in 2024 to USD 3.1/kg in 2028 (+8%).
• The Collagen and Gelatin (C&G) and Sa Giang (HNX:SGC) business segments are expected to experience stronger compound annual revenue growth than the pangasius segment, with projected growth rates of 17.5% and 20% / year for 2024 - 2028, primarily driven by volume increases. C&G production volume is expected to rise from 2,300 tons in 2023 to 5,000 tons by 2028, representing a CAGR of 16.5%, while SGC volume is projected to grow at a CAGR of 19.5% annually. NPAT-MI for these 2 segments is expected to maintain a CAGR of 26% and 14% for 2023 - 2028, respectively.
• Additionally, the company usually seeks investment opportunities in new sectors, with recent venture into the Thanh Ngoc fruit segment showing promising revenue growth.
• VHC’s debt ratio remains safe, given its low debt structure primarily focused on short term loans. The debt ratio is expected to gradually decline, with excess cash each year primarily allocated to working capital purposes.
Risks
• The valuation does not include the post-U.S. election policy as the import tax rate has not been determined.
• Pangasius prices are unlikely to recover soon due to ongoing global economic instability.
• Demand for pangasius is decreasing, as consumers in the US and EU tend to favor salmon and marine fish when economic growth is strong. However, pangasius prices are also expected to rise beyond projections if economic growth picks up.
• Revenue fluctuations in the C&G and SGC segments have a significant direct impact on overall business performance