Equity Analysis /

Vietnam Fisheries Sector: Contrasting effects from the trade war

    Tam Pham
    Tam Pham

    Fishery, Insurance

    Rong Viet
    12 September 2019
    Published by

    In this 13-page report we analyse Vietnam's fisheries sector, with a particular focus on Vinh Hoan Corporation. We have a Buy recommendation on the stock with a target price of VND102,600.

    Pangasius Sector

    Trade tensions between the US and China hindered pangasius exports into these top markets

    • Export value came at USD 962 mn, fell slightly 4% YoY, with export to the US tumbled 28% YoY, to China inched up 1% YoY and to the EU boomed 36% YoY.
    • The situation could be attributed to that Chinese seafood were dumped into the US before the effective dates of new high tariff and vice versa; the shortage of pelagic fish in the EU.
    • Potential competition from cod and pollock in 2H if US importers pile up stocks of these fishes to avoid high tariffs before the effective date Dec 15, 2019.

    Selling prices are under pressure due to weak global demand

    • Prices have risen dramatically in 2017 and 2018 due to the lack of pelagic fish, high demand in China and material fish shortages.
    • Weak demand in major markets (the US and China) pushed selling prices down in 1H. Selling prices are likely to recover slightly in 2H, the main export season.

    Shrimp Sector

    • Export value in 1H2019 reached USD1.44bn, 12% lower than 1H2018. Export to the EU tumbled 26% YoY, other major markets posted slight declines: the US (-2% YoY), Japan (-4% YoY) and China-Hong Kong (-5%).
    • India, Ecuador, Indonesia and Vietnam compete for market share by boosting production.
    • Global export prices have been driven down to a record low level at the end of 2018 and 1H2019. Low prices in 1H have reduced seeding for new crop in 2H but prices are likely to rally modestly as warm weather is favourable for shrimp development.