PAN — Company Visit — August 2024

Event

We recently met with PAN Group to discuss the company’s 1H24 results.

Details

Aquaculture revenue has surged YoY. Consolidated net revenue in 2Q24 reached VND3.4tn (+22% YoY). For 1H24, PAN’s revenue grew by 29% YoY to VND6.8tn, achieving 46% of full-year guidance. The YoY surge in revenue was mostly driven by the +30% YoY increase in aquaculture sales, which accounted for 44% of the group’s 1H24 total revenue.

Profit growth was even faster due to increased gross margins. 2Q24 PBT rose to VND256bn (+37% YoY), and PATMI reached VND85bn (+31% YoY). Thus, 1H24 PATMI reached VND102bn (+61% YoY), meeting 39% of the company’s annual target. 1H24 GPM expanded by +1ppt YoY to reach 19% due to increased ASPs, but management did not provide more detailed color on the pricing trends.

Tailwinds for 2H24? PAN expressed optimism about its 2H24 outlook and believes that it is well-positioned to exceed its annual revenue targets. In addition to the normal seasonal tailwinds, PAN expects a continued recovery in export markets to boost revenue from aquaculture (timed to the 3Q24 shrimp harvest) and packaged foods. PAN plans to leverage its market position during the 2H harvest season to drive sales of fumigation and agrochemical products.

We don’t cover PAN, but the valuation might appear cheap to some observers. PAN’s TTM PER of 9.5x is far lower than the peer median PER of 18.4x. But a more thorough understanding of the valuation would require an SOTP approach. PAN’s TTM ROE of 8.8% has been driven by net profit margin of 5% (flat YoY in 1H24), while net debt/equity is 140% at 2Q24. The stock has fallen by -14.3% since mid-July, but it is still up by +8% since our company visit note of Jan 9.

Risk: Syngenta contract termination, rising interest rates amid increased balance sheet leverage, and climate change would appear to be among the key risks.

Please access the link for our complete report: 20240807 PAN company visit 3

Analyst:

An Nguyen, An.nguyen@yuanta.com.vn

Binh Truong, Binh.truong@yuanta.com.vn