Vietnam dairy industry will benefit most from reduced input costs
- The downward trend of agricultural and livestock commodity prices in 1H2023 will be reflected on the 2H2023 gross margin of Vietnam F&B companies which were hurt by the surge of input prices during the 2021-2022 period. On the expectation that the consumption of F&B products is stable, we believe that when cheap raw materials takes effect, the gross margin of the F&B industry will recover.
- Among commodities, prices of raw milk powder is below-year ago level at the end of Jun-2023 while the prices of corn, wheat, soybeans or palm oil have surged since the beginning of Jun-2023. We suppose that the lower milk powders imported from China will be the main factor limiting the upside of global milk powder prices.
- Since Apr-2023, the price performance of Vietnam F&B stocks has bottomed out. Overseas investors has turned to net buyers on F&B shares since the end of Jun-2023. Meanwhile, the trailing P/E of some leading F&B stocks such as VNM or QNS have recovered since Apr-2023. Cash seems to be moving to F&B stocks.
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