Vietnam is competing fiercely with Ecuadorian shrimp.

Regarding the Vietnam fisheries industry outlook for the second half of 2024, KB Vietnam assesses that all major markets are starting to show signs of recovery, but the recovery speed is slow, and there are still many unpredictable factors. Major central banks have begun to show moves to cut interest rates, typically the ECB cutting interest rates in early June, and the Fed expecting to lower interest rates in the second half of this year. These are positive factors to consumer purchasing power.

However, the Vietnam fisheries industry still has many uncertain factors, including (1) anti-dumping duties; (2) political tensions that may cause freight rates to skyrocket; and (3) IUU yellow card affecting exports to the EU. In addition, Vietnamese fisheries products have to compete with fisheries from other countries in price and quality, requiring local businesses to improve ‘deep’ processing capacity. For the US market, the whole industry is waiting for official decisions on antisubsidy and anti-dumping tariffs.

In addition, Vietnam is competing fiercely with Ecuadorian shrimp with advantages of distance and prices in this market. Exports to China benefit from geographical advantages and this country’s limit ing shrimp imports from Ecuador and India due to sulfite residues.

Although demand is slow to recover in Japan, this market still favors deeply processed products, which adds one more advantage to Vietnamese shrimp compared to shrimp from other countries. Any business capable of deep processing will benefit on this market.

Shrimp businesses are all looking for their own directions in the context of slow export recovery and strong competition with shrimp from Ecuador and India. FMC focuses on deeply processed shrimp, hitting the Japanese market strongly. MPC encountered difficulties in the US market, so it intended to return to the domestic market through strategic cooperation with the BHX chain of MWG. CMX plans to develop fish processing and export to the Korean market when cooperating with the country's largest mart chain, Emart.

For the pangasius export industry, the recovery of the market in the US helped pangasius exports to have high expectations in 2H24. Besides, the US and the Western countries also issued a decree banning pollock from Russia, which will benefit Vietnamese pangasius. Pangasius export prices are also expected to recover slightly in the second half of the year thanks to supply shortages as low prices and unfavorable weather limit ed farming. However, in KB Vietnam’s view, exports to the US and EU markets are greatly affected when freight prices increase, which may hit the profits of exporting companies.

Pangasius exporting businesses expect a recovery in 2H24 when the demand from major economies rebounds. VHC is a leading enterprise in the industry with the ability to expand markets and manage costs well, especially enjoying zero anti-dumping tax in the US market, so it may have the best performance among other pangasius exporting peers. Enterprises such as IDI and ANV also expect to improve their exports, but the prospects will not be as good as VHC.

In terms of valuation, most fisheries stocks are near the five-year average P/B level, reflecting the market's neutral expectations for these stocks in the near future. With the prospect of a slow recovery and many uncertain factors, KB Vietnam gave a neutral rating to this sector. However, it said that during corrections, investors can focus on leading stocks in the industry with solid competitive advantages such as VHC and FMC. Besides, investors can also buy stocks when factors such as anti-dumping duties, IUU yellow card, and freight rates have more positive developments.