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Seasonal demand lifts food processors
Despite steep declines on the stock market, shares of food processors have been among a few rallying stocks recently, while investors anticipated the annual spike in demand for processed food products ahead of the Tet (lunar new year) holiday.
Although food processors' profits in the third quarter saw an improvement over the same period last year, some shrank from the second quarter as they stocked up inventories to meet anticipated year-end demand.
Reports from four companies – Long An Food Export (LAF), Safoco (SAF), Mechanics Construction and Foodstuff Co (MCF), and Yen Bai Agricultural Forestry and Food Products (CAP) – reflected inventories in the third quarter surging 134 per cent over the same period last year, while the combined overall earnings of the three companies increased by over 21 per cent.
While businesses in other sectors have had to halt their expansion plans due to the sluggish capital markets and rising input costs, food processing firms have had less trouble accessing capital. SAF, for instance, was able to sell 1.5 million additional shares and increase its charter capital to nearly VND45.5 billion (US$2.1 million).
MCF, meanwhile, earned VND16.8 billion ($787,800) in the first nine months of this year, exceeding its target for the entire year by 10 per cent. The company plans to issue 4.5 million additional shares. About 80 per cent of the capital raised from the issue will be allocated to expanded food processing capacity, although the company also plans to increase its charter capital from VND35 billion ($1.6 million) to VND80 billion ($3.7 million).
MCF chairman Nguyen Ngoc Nam said that the increase in capital would help the company ensure a safe financial structure and be less dependent on financing.
Masan Group (MSN), one of the top shares on the HCM City Stock Exchange, was also reportedly planning to introduce new products in time for Tet and expected this year's revenue would grow by 31-64 per cent.
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