BAF makes big profits from pig farming, why does it still want to raise another 1,000 billion VND?

A representative of BAF Vietnam Agricultural Joint Stock Company (code: BAF) shared that the positive business growth results mainly came from the continuous expansion of herd size and increased pork consumption output during the recent period...

BAF Vietnam (BAF) reported a 4.6-fold increase in profit.

BAF Vietnam Agriculture Joint Stock Company (Code BAF - HoSE) announced its business results for the third quarter of 2024 and the first 9 months of 2024 with impressive growth compared to the low base level of the same period last year.

In the third quarter of 2024, BAF Vietnam recorded revenue of more than VND 1,300 billion, up 8% over the same period last year. Thanks to good cost control, especially from two animal feed factories and a 10-20% decrease in raw material prices, gross profit increased by 56%, reaching VND 223 billion. Gross profit margin improved from 12% to 17% (the livestock segment alone achieved a profit margin of up to 25%).

Revenue from pig sales in the third quarter of 2024 reached VND 856 billion - an increase of 2.3 times over the same period and accounting for 65% of the revenue structure, thanks to the output of pigs sold reaching 163,000. By the end of the quarter, BAF's total pig herd reached 520,000, an increase of 73% compared to the beginning of the year, corresponding to the output of commercial pigs reaching about 1,000,000.

The improvement in gross profit and the reduction in losses from other activities resulted in BAF Vietnam recording a pre-tax profit of over VND67 billion, an increase of 63% over the same period last year.

In the first 9 months of the year, BAF Vietnam recorded consolidated net revenue of VND3,927 billion, up 8% over the same period. Pre-tax profit reached nearly VND275 billion, up 4.6 times over the same period last year.

Currently, BAF Vietnam has more than 36 high-tech livestock farms across the country.

BAF Vietnam representative shared that the positive business growth results mainly came from the continuous expansion of herd size and increased pork consumption output during the recent period.

BAF Vietnam is continuing to promote business pivot, gradually reducing the agricultural business segment, focusing on the livestock sector according to the closed 3F model (from farm to table). In mid-October, the company put into operation the largest farm cluster in the North, Hai Ha farm (5,000 sows, 60,000 pigs). Currently, BAF Vietnam has more than 36 high-tech livestock farms across the country.

Previously, BAF Vietnam also signed a cooperation agreement with Muyuan Foods, China's leading large-scale food and livestock corporation with a market capitalization of about 33 billion USD.

Under the cooperation agreement, Muyuan Foods will transfer smart livestock technology and equipment, integrating artificial intelligence into the sustainable livestock chain operation process for BAF Vietnam, aiming to support BAF Vietnam in expanding its pig herd to 450,000 sows and 10 million pigs by 2030.

Mobilizing more than 1,000 billion VND, accelerating production expansion, increasing pig herd

According to BAF Vietnam's written shareholder consultation document, the company wants to offer up to 65 million individual shares to professional securities investors without quantity limit.

The offering price is VND 15,500/share. The shares will be restricted from transfer within one year from the date of completion of the offering. The expected implementation time is in 2024 - 2025 after the company completes the offering registration with the management agency.

With over VND1,000 billion raised from the offering, BAF plans to use nearly VND558 billion to buy feed, additives, and raw materials for pig farms; VND450 billion to buy breeding pigs, weaned pigs, and gilts for farms. The expected disbursement time is from the fourth quarter of 2024 to the fourth quarter of 2025.

According to BAF Vietnam, the increase in charter capital is important for the company to achieve the livestock sector's goal of reaching 1.5 million commercial pigs sold to the market in 2025; 10 million commercial pigs sold to the market in 2030; a total herd of 400,000 sows in 2030 and becoming one of the three largest livestock enterprises in Vietnam.

Regarding capital structure, total short-term and long-term debt accounts for VND1,867 billion, including convertible bonds issued to the International Finance Corporation (IFC) with an interest rate of 5.25%/year, term of 7 years. Compared to the beginning of the year, the amount of debt remained the same.

Vietnam’s pork output this year is forecast to increase by 3% to 3.8 million tonnes due to expected herd expansion as the pig farming industry consolidates and improves ASF management, the latest report from the USDA said.

Meanwhile, because the supply of pigs for Tet was affected by the recent storm No. 3, the price of live pigs may increase in the coming time.

The Analysis Center of Tien Phong Securities Joint Stock Company believes that the price of live pigs will tend to increase at the end of this year due to greater demand in the context of the supply not being able to rebuild herds in time after the ASF epidemic. Currently, many businesses and small-scale farmers are in the process of rebuilding their herds after the ASF epidemic and it will take at least until December 2024 for new supply to be available on the market.

According to experts from Maybank IBG Research, pig prices may continue to increase in the coming time, but the increase will not be as strong as in the first months of the year. In the short term, pig prices may be supported by reduced supply due to losses of small-scale producers and disease outbreaks.

At the end of the third quarter, BAF Vietnam's total asset value reached VND6,959 billion, VND400 billion higher than at the beginning of the year. Of which, cash accounted for VND90 billion. In addition, the company also had VND323 billion deposited in banks awaiting maturity.

Inventory in 9 months has increased by 30% due to the increase in pig herd. Total inventory value accounts for 2,069 billion VND with pigs about to be released to the market.

Due to the focus on increasing pig herds and reducing agricultural business activities, BAF Vietnam's short-term receivables decreased by 62%, to only VND332 billion.

Fixed assets and long-term unfinished assets currently account for a total of VND 2,890 billion, including farms expected to be built and put into operation in early 2025.

Regarding capital structure, total short-term and long-term debt accounts for VND1,867 billion, including convertible bonds issued to the International Finance Corporation (IFC) with an interest rate of 5.25%/year, term of 7 years. Compared to the beginning of the year, the amount of debt remained the same.

Source: https://danviet.vn/baf-lai-lon-tu-nuoi-lon-vi-sao-van-muon-huy-dong-them-1000-ty-dong-de-lam-gi-20241031160017394.htm