BUSINESS NEWS HEADLINES APRIL 21

02:49

Shrimp exporters look forward to H2 comeback

Vietnam’s shrimp industry has found itself surrounded by difficulties since the beginning of this year due to COVID-19 but many exporters are now looking forward to a comeback in the second half after the pandemic is brought under control globally.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the country’s shrimp exports grew 2.6 percent to 383 million USD in the first two months of this year.

Despite posting a 37.5-percent decline in exports to one of its leading customers - China - which was in a nationwide lockdown, exports to other markets saw significant growth, for example Japan (16.5 percent), the US (22.3 percent), and the Republic of Korea (RoK) (12.4 percent).

The sector began feeling the pinch from COVID-19 in March, however, when the pandemic quickly spread throughout the rest of the world. Shrimp export value tumbled 15 percent year-on-year during the month to just 208 million USD, resulting in Q1 shipments falling 4.3 percent from a year earlier.

Most of Vietnam’s key markets have been badly hit by COVID-19, such as the EU and the US, where importers are suffering from shrinking sales and high inventories.

Authorities across Europe, the US, and the rest of the world have forced bars and restaurants to shut down and people to stay home, hitting seafood orders and causing prices to tumble.

VASEP estimates that about 20-40 percent of orders have been delayed or cancelled, with new orders being few and far between.

Domestic exporters have made every effort to remain resilient and survive amid the spread of the pandemic. Many have shifted focus to new foreign markets, boosted sales domestically, or created new processed products for supply to foreign retailers.

Insiders believe that if the pandemic fades by the end of the second quarter then global shrimp demand will likely rebound shortly after. They have advised local exporters to retain a certain amount of shrimp in stock so they are ready when orders return.

According to analysis from Rabobank, a fall in orders during the first half of 2020 will likely affect prices in the second half, since there may be large inventories in place.

Prices may fall during the current crisis but a steep rise is likely later in the year as supply dries up, assuming the market returns to normal, Robobank said./.

Bình Phước Province promises enterprises relief from difficulties caused by pandemic

The Bình Phước Province administration has worked with the developers of 13 industrial zones to remove difficulties faced by their tenants due to the COVID-19 pandemic.

These IZs have attracted more than US$2.1 billion worth of foreign investment and VNĐ6.3 trillion (US$268 million) worth of domestic investment and provided jobs to thousands of workers.

But the pandemic has interrupted production, causing 17 factories to shut down and 4,000 workers to lose their jobs or suffer reduced incomes.

The developers asked the People’s Committee to change land lease payments from annual to one-time mode.

Their tenants complained about the difficulties in arranging transportation for workers due to the social distancing requirement now.

Nguyễn Văn Lợi, Secretary of the province Party Committee, appreciated the companies for bringing their difficulties to authorities’ notice and told them to strictly follow social distancing norms to ensure workers’ safety.

He directed related departments and district authorities to quickly mitigate the difficulties faced by the businesses.

He also promised there would be policies to support workers affected by the pandemic.

Between January 29 and March 25 295 foreign workers returned to Bình Phước and were under medical supervision and in quarantine as directed by the Government.

Binh Phuoc cashew processors face shortage of capital, raw materials

Binh Phuoc Province, known as the "capital of cashew" in the country, is facing problems processing cashews due to limited raw materials and capital.

The province has around 134,000 hectares of land for cashew, and over 1,400 processing and exporting businesses that sell to markets such as the US, Australia and China.

Only 30 of them are able to import raw cashews for processing. The rest are small and micro businesses.

Processing businesses need around 600,000 – 800,000 tonnes of raw cashew annually, but the province is only able to provide 200,000 tonnes. Imports, which come from African countries, Indonesia and Cambodia, have high costs, which reduces profitability.

During the first two months of the year, the province exported US$61.7 million worth of cashews, and the value of each tonne of cashews was 23.1 per cent lower than that of the same period last year.

Vu Manh Tung, owner of a cashew processing facility in Phu Rieng District, said there was a shortage of raw materials because businesses were not investing enough in material production zones, and co-operation between businesses and farmers was weak.

Other cashew processing facilities in the province are also receiving fewer orders compared to last year due to COVID-19, and some small businesses have had to close down.

In addition, lack of access to capital is a major concern, said Nguyen Anh Hoang, director of the Department of Industry and Trade.

Many businesses have had to take out loans, and when there is market turbulence, banks issue fewer loans or tighten loan conditions, making it harder for businesses to get loans.

The province is working on a plan for concentrated cashew production areas that will improve value chains and link farmers to businesses. It is also facilitating investment in hi-tech, traceability, and geographical indicators.

Businesses have been encouraged to diversify their products and improve marketing to their consumers.

Cashew industry likely to miss export target due to pandemic: Vinacas

Pham Van Cong, Chairman of the Viet Nam Cashew Association (Vinacas), has said the cashew industry will struggle to achieve its export target of US$4 billion this year due to the novel coronavirus (COVID-19) pandemic.

The disease has caused many European and American countries to restrict the movement of people, so the demand for food reserves increased but there is difficulty in transport and processing of cashew nuts, according to Cong.

Some experts and cashew processors have forecast that cashew nut prices will fall further because it is not a main food. Consumers will prioritise spending on main foods during the pandemic.

Therefore, Cong told the Sai gon Giai phong (Liberated Saigon) newspaper that Viet Nam's cashew exports were expected to decrease in both volume and value. The total export value of cashew is estimated to reach $3 billion this year, $1 billion lower than the target.

According to the Ministry of Industry and Trade, the cashew export value in the first quarter of this year reached $644 million, an increase of only 0.8 per cent over the same period last year due to COVID-19.

The pandemic has also forced the association to delay the 2020 International Cashew Conference from March 2020 to next year, and also re-arrange plans on organising trade promotion delegations to China under the National Trade Promotion Programme, according to Cong.

With that situation, the association has recommended cashew processing and export enterprises to consider carefully before deciding to import raw cashew from other countries for processing, including from African countries and Cambodia. The enterprises should not purchase raw materials when they do not have yet cashew nut export contracts.

They need to collect market information from many sources, thereby assessing the local and global cashew markets and impacts on those markets, especially the impact of the pandemic, to ensure their production and business efficiency.

At the same time, cashew farmers are also facing many difficulties due to the pandemic. Therefore, Vinacas has called on the enterprises to promote purchasing of raw materials from the farmers. That will contribute to maintaining development of the local raw material regions.

Travel industry demands coronavirus support

The HCM City Department of Tourism said it has submitted to the State Bank of Viet Nam a list of 31 travel and tourism firms that are seeking help to make it through the disruption caused by the COVID-19 pandemic.

They want new loans, cuts in their bank loan interest rates and more time for repayment so that they could remain in business and keep their employees.

The tourism industry is in urgent need of Government assistance to retain its workforce and recover as soon as the pandemic ends, Tran The Dung, deputy director of Young Generation Travel, said.

Nguyen Quoc Ky, general director of Vietravel, said the industry, which has been accounting for more than 10-11 per cent of the city’s economy for the last few years, needs a relief package from the Government.

It is now difficult for travel firms to get loans from banks since most of them have no assets to mortgage, he said.

Nguyen Thi Khanh, deputy head of the city Tourism Association, said the pandemic has crippled businesses and caused the loss of thousands of jobs.

Businesses find it difficult to access aid packages from the Government and banks, she said.

In the first quarter 90 per cent of more than 1,000 small and medium-sized travel businesses in the city suspended operations as the coronavirus brought tourism to a standstill.

Businesses in the city project losses of trillions of dong in the second quarter.

Moody's reaffirms B1 credit rating for HDBank despite pandemic challenge

Global credit ratings agency Moody's Investors Service has reaffirmed the B1 credit rating for HDBank amid a challenging market situation due to the impact of the COVID-19 pandemic and social distancing orders from the Government.

Moody’s said the bank has good profitability, improving capitalisation and good portfolio of liquid assets and is making solid progress in risk management.

In its 2019 financial report released recently, HDBank had total consolidated assets of nearly VND229.48 trillion (US$9.78 billion), equity of VND20.38 trillion ($867.8 million) and profit before tax of nearly VND5.02 trillion ($213.8 million), its highest ever.

Return on average assets (ROAA) and return on average equity (ROAE) were 1.8 per cent and 21.6 per cent.

HDBank’s non-performing loan ratio continued to be strictly controlled, at less than 0.98 per cent, placing it among the banks with the lowest NPL ratios in the banking industry, a status it has enjoyed for many years.

Last year it received approval from the State Bank of Vietnam to adopt Basel II standards ahead of schedule, and its capital adequacy ratio (CAR) reached 11.2 per cent, much higher than the minimum of 8 per cent prescribed.

In the first three months of this year, despite the COVID-19 pandemic and the big changes it wrought in the domestic and global markets, HDBank achieved very positive business results.

Consistent with its sustainable development strategy, harmonising its economic development goals and accompanying the community in all activities, HDBank has always come up with timely development strategies suitable for each period.

In response to the COVID-19 outbreak, HDBank quickly established an emergency committee for epidemic prevention and control, and has carried out effective measures. It has taken practical measures to protect the health of its employees and customers, and ensure continuous and safe operation of its entire system nation-wide.

In joining hands to support the economy and customers in this challenging time, HDBank is offering many preferential programmes. It has set aside VND10 trillion ($426 million) to lend to producers and corporates who supply goods and services to supermarkets at interest rates starting at 6.5 per cent, VND5 trillion ($213 million) to lend to small and medium-sized enterprises and VND3 trillion ($127.6 million) for cutting fees and interest rates for enterprises that supply drugs and medical equipment.

It also offers preferential loans to individual and super small business customers affected by the pandemic at interest rates that are 2-4.5 percentage points lower than normal.

Besides, it has a VND1 trillion ($42,703) package to support the agricultural supply chain to ensure production and domestic supply of rice and help businesses facing difficulties due to saltwater intrusion in the Mekong Delta.

It is also enhancing technology application and promoting cashless payment solutions.

Phu Nhuan Jewellery sees revenue up but profit down in Q1

Phu Nhuan Jewellery JSC (PNJ), the largest jewellery retailer in Viet Nam, reports revenue up 5 per cent but profit down 4 per cent in the first quarter of this year.

The company earned revenue of VND5 trillion (US$213 million) and post-tax profit of VND411 billion in Q1.

This year, PNJ targets to achieve revenue of more than VND19 trillion and post-tax profit of VND1.35 trillion. Thus in Q1, the company completed 26% of the revenue target and 30% of the profit target.

Particularly in March, despite difficulties due to the COVID-19 pandemic, PNJ's monthly revenue still recorded a growth rate of 6 per cent over the same period last year, mainly thanks to the growth of 75 per cent of revenues from the sale of gold pieces.

During the month, retail sales decreased by 10 per cent due to temporary closures and social distancing orders under the Government's directives to prevent and combat the COVID-19 pandemic.

PNJ has closed 85 per cent of its stores since the last week of March. Of those, all stores in HCM City and Ha Noi, which contributes 55 per cent of total revenue, have been closed. This greatly affects PNJ's profit, as 90 per cent of the company's gross profit comes from the jewellery retail segment.

Although revenue from online sales in Q1 increased by 173 per cent against last year, the proportion of online sales was still very small, accounting for only 1 per cent of total revenue.

This year, PNJ targets revenue growth and profit growth of 12 per cent and 13 per cent, respectively.

However, Rong Viet Securities JSC (VDSC) said the current situation could make the plan infeasible.

"COVID-19 is greatly affecting PNJ's business results. The jewellery retail segment is suffering heavily from social distancing orders and temporary closures," VDSC said.

Cash-rich firms more resilient amid pandemic

Cash-rich companies are in much better shape to weather market crises amid the impact of the COVID-19 pandemic than their peers on the stock market, said VNDirect Securities Corporation (VNDS).

“The COVID-19 pandemic has not only caused a global disruption but also threatened to bring about a worldwide economic recession,” stated the newly released report by VNDS.

Investments in companies with strong finances help safeguard returns during market crises because businesses with ample cash will be better able to cope with challenges and recover faster than others, VNDS said.

“At this time, the COVID-19 pandemic acts like a natural selection process, opening up new business opportunities, especially for businesses with strong financial capacity to gain market share, leaving their opponents far behind,” VNDS said.

VNDirect Securities Corporation has filtered out businesses with abundant cash balances to help investors determine the stocks with high investment potential.

To classify businesses, VNDirect applied a filtering method to all 1,023 stocks on the three floors of HoSE, HNX and UPCOM, excluding companies in the banking, insurance and securities VNDirect.

Under VNDS's filtering method, a cash-rich company has average weekly liquidity, or matched volume, of more than 10,000 shares; market capitalisation of over VND200 billion (US$8.5 million), net cash/market capitalisation ratio of more than 50 per cent and debt/equity ratio lower than 1.

Based on the filtered list, VNDS expects recovery from oil and gas stocks such as Petrovietnam Fertilizer & Chemicals Corporation (DPM), PetroVietnam Technical Services Corporation (PVS), PetroVietnam Oil Corporation (OIL) and PetroVietNam Low Pressure Gas Distribution JSC (PGD).

The industrial real estate and logistics stock groups are also expected to recover faster than other sectors thanks to the movement of capital from China to Viet Nam and free trade agreements involving Viet Nam.

Meanwhile, the construction industry, especially the civil construction sector, is not tipped for success due to the gloomy real estate market in 2020.

Despite rising demand for housing, the postponement of project licensing and capital pressure will weigh on real estate developers in the post-disease period, VDNS said.

PV Gas set for huge profit decrease

PetroVietnam Gas Corporation JSC (PV Gas) expects to see massive sales and profit decreases this year.

The firm predicts it will record more than VND66 trillion (US$2.79 billion) in sales and VND66.2 billion in profit after tax for 2020, down 13 per cent and 45 per cent respectively compared to last year.

PV Gas’s management board said in the firm's annual report that it aimed to ensure the progress of investment projects which will secure the use of 9.2 billion cubic metres of gas for local households.

The report said the global economic and political situation, especially the COVID-19 pandemic, meant there were a lot of problems to cope with.

The firm added that the increasing cost of maintaining its facilities, declining sources of gas and lower prices for the products created more problems.

PV Gas's sales and profits plummeted in the first quarter. The firm earned VND17.5 trillion in revenue, down 6.6 per cent from the same period last year while pre-tax profit and post-tax profit also fell about 31 per cent year-on-year to VND2.6 trillion and VND2.1 trillion, respectively.

According to Phu Hung Securities Joint Stock Company (PHS), global oil prices are still unstable due to a sharp decrease in demand caused by the pandemic. Oil prices have plummeted from $60 barrel at the beginning of 2020 to only $20 and fluctuated sharply.

PHS said as the pandemic was still complicated, it would continue to affect production and trading of natural gas, causing potential losses for revenue and gross profit PV Gas.

However, the securities firm also stated that as PV Gas’s growth driver was its exclusive distribution of natural gas in Viet Nam, it should be able to cope. PV Gas has a 100 per cent market share of natural gas and is the top LPG supplier, accounting for 75 per cent of LPG market share.

Gas demand for gas power plants is forecast to continue to grow strongly due to increased demand. In the long term, Viet Nam's LPG market has a lot of potential for developing residential and LPG needs for industrial customers, said the securities firm.

Shares of PV Gas with the sticker of GAS fell by more than 41.5 per cent in the first quarter. However, in the first half of April, along with the recovery of the stock market, it increased by 21.5 per cent.

Yesterday, each share of GAS was rated at VND67,700 on the Ho Chi Minh Stock Exchange.

Thailand’s tourism hard hit by COVID-19 pandemicThailand is likely to welcome only 16 million foreign tourists in 2020, much lower than the pre-COVID-19 pandemic target of 40 million, according to the Tourism Authority of Thailand (TAT).

The estimates have the country losing almost 24 million international tourist arrivals and 1.9 trillion baht (58.4 billion USD) in revenue.

The TAT also forecast the number of domestic holiday-makers stand at 60 million, far below the target of 172 million before the COVID-19 outbreak.

Total revenue of the tourism sector is estimated at 1.12 trillion baht (34.4 billion USD) in 2020, down 62.8 percent from the record 3.01 trillion baht in 2019.

TAT Governor Yuthasak Supasorn said that this revised forecast assumes tourism activities can resume in May, with the outbreak in Thailand levelling off while overseas infections subside.

The industry needs to watch the situation closely before commencing business, he noted, adding while the number of new COVID-19 cases in Thailand is falling on a daily basis, the tourism sector can't drop its guard. Instead it should wait for the related authorities to give the final say on when to lift the lockdown or travel restrictions.

Tourism has been the driving force for Thailand’s growth in recent years. Before the COVID-19 outbreak, the country expected that revenues from the industry would contribute at least 20 percent to the nation’s GDP this year. However, tourism was the first industry hard hit by the pandemic.

Statistics showed that the sector’s revenue decreased by nearly 40 percent in the first quarter to 335 billion baht, while the number of foreign tourists fell by 38 percent to 6.7 million.

By April 18, the country had recorded 2,733 infection cases, including 47 fatalities./.