Minh Phu Seafood Corporation, Vietnam’s largest shrimp exporter, has reported a notable rebound in its financial performance, driven by strong dividend contributions from subsidiaries. The company’s after-tax profit in the third quarter of 2024 reached VND 198 billion (USD 7.79 million), marking a high unseen in the past seven quarters and contrasting sharply with a VND 13.3 billion (USD 524,526) loss in the same period last year. This upturn, attributed to dividends from subsidiaries Minh Phu Hau Giang Seafood and Minh Phu Seafood Supply Chain, underscores Minh Phu’s strategic reliance on its broader supply network.

Revenue and Expenses Surge as Shrimp Demand Climbs

For the third quarter, Minh Phu’s net revenue hit VND 2,700 billion (USD 106.24 million), a 35% increase year-on-year. Gross profit rose by 9% to VND 202 billion (USD 7.96 million), although the gross margin decreased to 7.5% from nearly 10%, reflecting higher costs amid increasing competition. Expenses, too, escalated significantly: financial expenses surged by 48% to VND 147 billion (USD 5.79 million), sales expenses by 74% to VND 151 billion (USD 5.94 million), and administrative expenses by 5% to VND 26.5 billion (USD 1.04 million).

The uptick in costs underscores the challenges Minh Phu faces in a climate of heightened inflation and volatile shrimp prices. Financial revenue, however, surged to VND 319 billion (USD 12.56 million) from a modest VND 10 billion (USD 394,000) in the prior year, primarily due to the dividend inflows.

Nine-Month Results and Ambitious Targets for 2024

In the first nine months of 2024, Minh Phu’s net revenue totaled VND 6,207 billion (USD 244.35 million), a 33% rise from the same period last year. Gross profit during this period reached VND 483 billion (USD 19.02 million), with the gross margin steady at 8%. The after-tax profit stood at VND 135 billion (USD 5.31 million), a notable 19-fold increase, reflecting the impact of effective cost management and strategic partnerships within the shrimp industry.

The company has set ambitious targets for 2024, aiming for 70,000 metric tons in production and VND 18,569 billion (USD 730.52 million) in revenue. Profit projections target an after-tax return of VND 1,266 billion (USD 49.8 million), the third such ambitious target in five years.

Adapting to Economic Headwinds

Minh Phu’s management remains cautious about the year-end targets, given the backdrop of inflationary pressures and rising energy costs. High inflation poses a threat to global shrimp demand and may drive up costs for feed and other farming materials. To mitigate these risks, Minh Phu has diversified its product portfolio, emphasizing value-added products through deep processing and stringent quality control of input materials.

Energy prices and shipping costs remain pivotal issues, prompting the company to adopt a flexible business strategy with an eye on domestic expansion and Asian markets. By bolstering its domestic presence, Minh Phu aims to increase domestic sales revenue from the current 1% to 5-10%.

Financial Health and Stock Performance

At the end of the third quarter, Minh Phu reported total assets of VND 8,159 billion (USD 320.96 million), reflecting a VND 588 billion (USD 23.13 million) increase since the beginning of the year. Liabilities stood at VND 2,638 billion (USD 103.79 million), predominantly short-term, while owner’s equity rose slightly to VND 5,521 billion (USD 217.17 million). The undistributed profit after tax was VND 1,242 billion (USD 48.89 million).

Despite the strong financial performance, MPC shares are down 14% from their peak in June 2024, closing at VND 16,300 (USD 0.64). The company’s market capitalization stands at VND 6,520 billion (USD 256.81 million), with approximately 400 million shares on the UPCoM exchange.