Dabaco's net profit in 2024 could exceed VND500 billion, 21 times higher than last year

Pork prices remain above high base level, main growth driver for Dabaco

The price of live pigs this weekend, until June 29, 2024, will be adjusted in some places. The North and Central regions will keep the selling price unchanged, specifically in the North, it will fluctuate between 67,000 - 69,000 VND/kg; the Central region will buy at around 63,500 VND/kg.

The Southern region fluctuated slightly, with a price decrease of 1 in the provinces of Binh Thuan, Vung Tau and Ben Tre, trading in the range of 65,000 - 67,000 VND/kg. The regional average decreased to 66,300 VND/kg.

The price of live pigs has fluctuated slightly in the past few days, but is still considered high. The reason for the high price of pigs in recent months is due to a sharp decrease in supply because the price of live pigs was low in the past, causing farmers to reduce investment in herd restoration.

Currently, the price of live pigs is at its highest level in the past 4 years, while the price of animal feed has decreased, helping farmers make big profits.

Specifically, the price of raw materials and animal feed in the first quarter of 2024 will decrease by 12-20% compared to the same period last year. The price of animal feed will be adjusted down by 300-400 VND/kg, helping to reduce the burden on farmers.

With the current price of live pigs and farming costs, experts say that farmers can make a profit of about 800,000 - 1,000,000 VND/pig when selling.

The reluctance of livestock farmers to restock, along with reduced meat imports and good control of smuggling, which has kept pork prices high, will be the main growth driver for Dabaco (DBC) this year.

According to Mr. Nguyen Xuan Duong - Chairman of the Vietnam Livestock Association, the increase in live pig prices is in line with market rules. Because after a long period of time, the live pig price dropped sharply to about 46,000-50,000 VND/kg, causing many farmers to fall into difficult situations and make no profit. Up to now, the live pig price has increased to 65,000-69,000 VND/kg, which is a reasonable level for farmers to make a profit. As of the end of April, the total pig herd in the country was about 28 million, an increase of about 3.7% over the same period in 2023. Pig farming is a key sector, accounting for over 60% of the total output of live pig meat of domestically produced livestock.

Thus, the increase in live pig prices is one of the positive signals, creating momentum for the livestock industry to continue to recover and develop. At the recent 2024 Annual General Meeting of Shareholders, Mr. Nguyen Nhu So - Chairman of the Board of Directors of Dabaco Group Joint Stock Company (stock code: DBC) said that the group's production cost is currently only at 48,000 - 51,000 VND/kg, the selling price is planned to be cautious, set at 52,000 - 53,000 VND/kg; while in fact, the price of live pigs in the market has recovered positively, currently the highest is nearly 70,000 VND/kg.

Therefore, Mr. Nguyen Nhu So confidently said that the profit in the second quarter of 2024 could increase dramatically, striving to reach about 250 billion VND. This figure is nearly 3.5 times higher than the profit in the first quarter. Mr. Nguyen Nhu So also said that Dabaco Group's pig herd productivity is currently at the best level in its operating history. With the advantage of available and abundant supply, this will be the main driving force to boost Dabaco Group's profit in the second quarter.

Dabaco (DBC) net profit is forecast to increase by 1,973.1%

According to MB Securities Company (MBS), in the first quarter of 2024, Dabaco recorded total revenue of VND 3,253 billion, an increase of 41% over the same period; mainly from the growth of the animal feed and animal husbandry sector.

The first quarter marked the first recovery of live hog prices in the market amid a shortage of domestic supply, while live hog prices continued to rise. Thanks to the positive business situation of the pig farming segment, gross profit margin reached 11% (while in the first quarter of 2023 it was negative 4%).

The ratio of sales and administrative expenses to total revenue has been effectively optimized. In summary, Dabaco's net profit reached VND 73 billion, a significant improvement compared to the loss of VND 320 billion in the first quarter of 2023.

According to MB Securities Company (MBS), in the first quarter of 2024, Dabaco recorded total revenue of VND 3,253 billion, an increase of 41% over the same period; mainly from the growth of the animal feed and animal husbandry sector.

MBS believes that the current high pig price increase at the end of the year will be a growth driver for DBC in 2024-2025. Pig prices are forecast to remain at VND65,000/kg and are likely to reach VND75,000/kg by the end of the year due to a shortage of domestic supply and increased consumer demand at the end of the year and during holidays. In addition, high pig prices will stimulate the rate of herd restoration from farming households, thereby improving Dabaco's pig breeding business.

Meanwhile, the animal feed sector remains stable thanks to stable input material prices at low levels and increased herd restoration rates of livestock households, helping animal feed consumption increase by about 5% compared to 2023.

MBS expects DBC's net profit in 2024 to reach VND518 billion, up 21 times compared to last year (DBC's net revenue and net profit in 2024 will reach VND12,579 billion and VND518 billion, up 13.2% and 1,973.1% respectively over the same period). Net profit in 2025 may continue to increase by 20.6% when pork prices and input prices of animal feed remain stable.

Large-scale livestock farm (Dabaco Tuyen Quang) meets national technical standards on environment.

It is known that during the period of increasing pork prices, DBC has the advantage of a professional, closed-loop farming model, along with the ability to restore the herd early from the first quarter of 2024, helping DBC proactively supply the market. Dabaco also owns the 3F model (Feed - Farm - Food), so the input price of raw materials for animal feed production has cooled down, creating favorable conditions for the business activities of the enterprise. In 2023, the animal feed segment will have a profit of about 300 billion VND, which has compensated for the unfavorable business performance of the pig farming segment.

MBS also sees great expectations for Dabaco's ASF vaccine. MSB assesses that vaccine production and commercialization development is a potential story for DBC in the medium and long term. Although it does not bring in high revenue compared to DBC's business scale, this field has good profit margins and will bring stable profits to the business. According to a recent sharing by the Dabaco Group's board of directors, the African swine fever vaccine factory with a capacity of 200 million doses/year is in the acceptance phase and the vaccine trial results are expected to be available in the third quarter of 2024.

Source: https://danviet.vn/loi-nhuan-rong-nam-2024-cua-dabaco-co-the-vuot-500-ty-dong-tang-gap-21-lan-so-voi-nam-ngoai-20240630164134562.htm