Vinamilk (VNM): 2 key projects are about to come into operation, expected to pay additional dividends in 2023

Vietnam Dairy Products Joint Stock Company (Vinamilk) has just announced that two key projects with an investment scale of thousands of billions of VND are expected to come into operation soon. At the same time, this dairy company plans to pay additional cash dividends in 2023. Want to pay additional cash dividends in 2023

Vinamilk aims to increase net profit this year by 4% compared to 2023.

Vietnam Dairy Products Joint Stock Company (Vinamilk, stock code VNM - HoSE) has just announced documents for the 2024 Annual General Meeting of Shareholders, scheduled to be held on April 25. This year, the dairy company plans to do business with a revenue target of VND 63,163 billion and a profit after tax target of VND 9,376 billion, up 4.4% and 4% respectively compared to the level achieved in 2023. Notably, regarding the profit distribution plan, Vinamilk's Board of Directors plans to submit to shareholders for approval the final dividend payment in 2023 at a rate of up to 9.5%, equivalent to a shareholder owning 01 share will receive VND 950 in dividends. This dividend payment is expected to be made this year. Previously, Vinamilk had made interim dividends to shareholders in 2 installments. Specifically, the first installment will take place in October 2023 at a rate of 15%; the second installment will take place in February 2024 at a rate of 5%. The third dividend payment with a rate of 9% is expected to be made in April 2024. Thus, if the fourth additional dividend payment plan is approved, Vinamilk will complete the 2023 profit distribution plan with a total rate of 38.5%. Sharing more information about this year's business strategy, Ms. Mai Kieu Lien - General Director of Vinamilk said: "Entering 2024, with the expectation that the macro situation will improve, we expect Vinamilk's revenue and profit to continue to grow. Our priority is to continue to recover market share and sales in a sustainable and profitable manner." According to many financial institutions, the price of raw milk powder continues to be low and is expected to decrease significantly this year, which is actively supporting Vinamilk's business results. In early February, Mr. Le Thanh Liem - Vinamilk's CFO, said that the business results in the first quarter of 2024 will be "much better" than the same period in 2023 and the company has finalized raw material prices for production until the end of the first half of 2024. Two key projects are expected to operate this year

Vinamilk is spending 1,500 - 2,000 billion VND/year to invest in upgrading and expanding production.

In the period from now to 2026, Vinamilk will continue to focus on implementing key projects to strengthen its business capacity in the medium and long term. Specifically, for the Vinabeef Tam Dao Beef Breeding and Processing Project in Vinh Phuc province, Vinamilk and its subsidiary - Vietnam Livestock Corporation (Vilico) have cooperated with Sojitz Group (Japan) to invest in a closed, modern livestock and processing system on an area of 75.6 hectares. The project consists of 2 main sub-areas including a beef cattle farm with a capacity of 10,000 heads and a chilled beef processing factory with a capacity of 30,000 beef cattle/year, equivalent to 10,000 tons of products/year for the national market and export. The scale of cooperation in each phase is expected to be up to 500 million USD (equivalent to nearly 12,500 billion VND). Phase 1 of the project, with an investment capital of nearly 3,000 billion VND, is expected to come into operation this year.

VNM Vinamilk stock price — Price movements and trading volume of Vinamilk's VNM shares since the beginning of 2023. (Source: TradingView)

For the Moc Chau Dairy Paradise Complex Project in Son La province, Vinamilk and its subsidiary - Moc Chau Dairy Cow Breeding Joint Stock Company (Moc Chau Milk) are implementing a complex project with a total investment of up to VND 3,150 billion. This project includes a high-tech dairy farm with a scale of 4,000 cows combined with eco-tourism and a high-tech Moc Chau milk processing factory with a capacity of 500 tons of milk/day (Phase 1). The project started construction in 2022 and is expected to be operational in 2024. For the Lao - Jagro Dairy Farm Complex Project in Xieng Khuang province, Laos, implemented by a joint venture of Vinamilk (holding 51% of shares), Phase 1 has a scale of 8,000 cows, including 4,000 organic dairy cows. The project has been in operation since 2022 with a milk output of up to 44,000 tons/year. Phase 1 of the project was implemented on an area of 1,000 hectares with a total investment of 120 million USD. The project has also completed Organic certification for an area of more than 600 hectares according to EU/NOP standards (Europe and the US). Phase 2 of the project is expected to expand the farm to 15,000 - 20,000 hectares with a scale of raising 100,000 animals. The total investment capital in the two phases will be up to 500 million USD. In addition, Vinamilk is promoting the expansion of production capacity. Currently, this enterprise is spending from 1,500 - 2,000 billion VND/year to invest in upgrading production. In 2024, Vinamilk plans to hire consultants to improve marketing activities of infant formula, restructure distribution channels towards more access to hospital channels and modern sales channels to achieve the goal of regaining an additional 1% market share in this segment.

Manh Hung

source