Positive signal for pangasius exports to China from Q2/2023, which businesses will benefit?

Although many information said that orders from China are expected to increase gradually from Q2/2023. But the question of interest now is how much will Vietnamese pangasius businesses benefit from this recovery?

Positive signal from pangasius exports in China from Q2

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), in January 2023, pangasius exports reached US$83.6 million, down 44% from the previous month and down 61% over the same period in 2022. Pangasius exports in January 2023 to all major markets decreased by double digits. In which, the US market dropped the most when all parameters were negative in double digits.

With a deep and continuous decline, the US fell to the 3rd position (after China and the EU) in the largest markets of Vietnamese pangasius exports. In the US, seafood inflation remains lower than for many other products, but rising prices continue to weigh on sales.

In fact, pangasius exports to the US market continue to be low, stemming from the high background of 2022, low demand and excess inventory of retailers. Since the export price to the US is the reference price for other markets, this decline is also putting pressure on the overall selling price of the industry.

In addition, export volumes are showing a bleak outlook for the first half of 2023. As a result, Vinh Hoan (VHC) suffered a severe drop in revenue in Q4/2022 and this situation is expected to continue. to the first half of 2023.

Contrary to the US, VASEP believes that Vietnam’s pangasius export situation in the next quarter is expected to record more positive signals, especially when businesses promote exports to the Chinese market. In the past three years, when other markets were recovering, demand in China has weakened. So demand is expected to increase in 2023 after the economy reopens.

“Specifically, in March and April, there will be trade promotion programs, which businesses can take advantage of to promote, promote interaction and connect with partners. At the same time, prepare raw materials so that when the market recovers, exports can be increased. China is currently Vietnam’s No. 1 pangasius import market, a bright spot for pangasius businesses in recent years” , a representative of VASEP said.

How will Vietnamese pangasius businesses benefit?

Although many information said that orders from China are expected to increase gradually from Q2/2023. But the question of interest now is how much will Vietnamese pangasius businesses benefit from this recovery?

According to the analysis of Rong Viet Securities (VDSC), although China has officially reopened in early 2023, Vietnam’s pangasius exports to this market have so far not improved significantly. The underlying problem still seems to be that demand has yet to fully recover and this could be attributed to the impact of falling Chinese incomes and the slow recovery of restaurant service.

The analyst team’s assessment suggests that there may be a partial delay of about 3-6 months for Chinese people to adjust to the new normal and for food services to fully reopen. Although orders may recover strongly in Q2, VDSC predicts that selling prices will remain low in the near future.

It is worth noting that the impact of this event on businesses will not be uniform. Although companies with export revenue in this market will likely benefit from the recovery of orders, VDSC believes that this is not enough to bring the seafood industry back to the bullish cycle.

Firstly, the expected recovery of the Chinese market is expected to only partially offset the decline in other markets in 2023. Second, while VDSC sees a recovery mainly in terms of manufacturing output. For export, selling price is expected to remain low and raw fish price to remain high, leading to a negative price gap between selling price and raw material price, which will narrow the gross profit margin of businesses. Karma.

Therefore, despite the positive impact from China’s reopening, the analyst team maintains the view that the profit of most pangasius businesses will grow negative in 2023.

The reopening of the Chinese market may bring profits to some pangasius enterprises that have already established export channels to China (ANV, IDI). However, this development will have the effect of mitigating the significant decline in business performance of these exporters compared to the high recorded in the same period, rather than bringing the industry into a boom cycle. new.

However, VDSC experts believe that there will still be opportunities for investors to use short-term trading strategies based on relevant news and selective companies, but long-term holding for the group This industry in 2023 will face many risks from fluctuations in export markets and declining business results.

Ha Anh/Market life