PAN Joint Stock : The continued impressive growth of The PAN Group in quarter 2.2022

On July 29, The PAN Group Joint Stock Company (HSX: PAN) announced its 2022 mid-year consolidated financial statements. Accordingly, thanks to successfully sustaining the strong momentum from the first quarter, the Group achieved impressive growths in both revenue and profit in the second quarter as well as the first six months of the year.

Consolidated business results for the second quarter of 2022

In the second quarter, most of The PAN Group's member companies experienced major growths in both revenue and profit from principal activities. Thanks to the huge contribution from VFC, The PAN Group's consolidated business results achieved distinctively rapid rises, compared to the same period last year.

ITEMS	Q2.2022	Q2.2021	+/- %
Net Revenue	3,219,715	2,279,701	41.2%
Profit before tax	254,214	115,323	120.4%
Profit after tax	227,818	109,846	107.4%
Profit after tax attributable to shareholders of the parent company	97,965	60,990	60.6%

(Source: Consolidated financial statements for the Q2.2022, The PAN Group)

The PAN Group's second quarter consolidated net revenue reached nearly VND 3,220 billion, an increase of 41.2% over the same period in 2021. Meanwhile, profit after tax was approximately VND 228 billion, a rise of more than 107% compared to Q2 last year.

Consolidated revenue increase was contributed by VFC with VND 640 billion (unconsolidated in 2021) and high revenue growths from other member companies, including: FMC - up 35%, ABT - up 129% , Bibica - up 30%; Vinaseed - up 7% and Lafooco - up 47%.

Profit after tax rocketted by VND 118 billion, equivalent to 107%, mainly contributed by profit after tax from VFC with VND 59 billion, an increase of Vinaseed with VND 20 billion and rises of FMC and ABT with more than VND 30 billion. Profit after tax attributable to shareholders of the parent company reached ~ VND 98 billion, up 61% compared to Q2.2021.

In terms of segment evaluation, Seeds, Agrochemicals and Aquatic products continued to have a good quarter of growth when profits after tax of Vinaseed, VFC, FMC and ABT all achieved an increase rate of over 30% (especially for FMC with the increase of 40%). Vinaseed's seed segment with the launch of exclusive rice varieties (e.g. VNR20) generated a high gross profit margin in the second quarter. Moreover, Aquatic products such as shrimp and pangasius still benefited from high demand in export markets.

Meanwhile, confectionery and nut segments faced challenges in this quarter since their selling prices could not rise quickly and accordingly to cover the the soar of raw materials costs, which depressed gross profit margin. For example, in the confectionery segment, the costs of main raw materials including flour, eggs and milk have all risen by 30-50%, compared to the beginning of 2022.

Consolidated business results for the first 6 months of 2022:

ITEMS	2022H1	2021H1	+/- %
Net Revenue	6,168,268	3,847,077	60.3%
Profit before tax	464,663	171,955	170.2%
Profit after tax	396,039	158,761	149.5%
Profit after tax attributable to shareholders of the parent company	175,248	82,723	111.8%

(Source: Consolidated financial statements for Q2.2022, The PAN Group)

Generally, in the first 6 months of 2022, consolidated net revenue reached ~ VND 6.2 trillion, an increase of 60% compared to the same period in 2021. Net revenue increased by VND 2.3 trillion, of which 1.3 trillion contributed by the consolidation of revenue from VFC. Excluding this contribution, revenue growth would be 26%.

Member companies with high revenue growth were ABT (123%), FMC (36%), Lafooco (42%) and Vinaseed (15%). VFC also achieved a significant breakthrough in revenue (an increase of 30%) and profit (an increase of 44%) thanks to becoming an official distributor of Syngenta's products (currently distributing 3 products).

Accumulated profit after tax in the first 6 months increased significantly by 150%, thanks to more than VND 126 billion abnormal profit Bibica recorded from the transfer of its factory in the first quarter. The profit attributable to shareholders of the parent company in the first 6 months of the year reached VND 175 billion, more than 2 times higher than the same period in 2021.

In terms of segment evaluation for the first 6 months of the year, Aquatic products and Agriculture still recorded positive achievements. In particular, while the principle business activities in the food segment were heavily affected by the increase in raw material costs, the business performance of Bibica and Lafooco, witnessing a downward trend for gross profits in the second quarter, were compensated by Bibica's abnormal profit and Lafooco's good business results of the first quarter.

Forecasts for the last 6 months of the year

The high inflation and the considerable risk of recession in major global economies lead to the rise of business risks for all of The PAN Group's segments as demand may decline again as well as raw material costs and logistics expenses continue to stay high. However, there are potentials for growth as follows:

• The recovery of the confectionery segment in peak sales seasons for Mid-Autumn Festival and Lunar New Year;
• High demand for seeds and agrochemical in the last quarter for the winter-spring crop;
• Favorable opportunities for Aquatic products to grow, though slowly, thanks to high demand for foods in the global market.

In short, at the end of the first 6 months of the year, The PAN Group fulfilled 43% of its revenue plan and 49% of the profit plan for 2022. With the 3rd and 4th quarters being the peak sales seasons for key business segments, The PAN Group is confident to complete and even exceed the business plan approved by the General Meeting of Shareholders.