Ranee Fish Oil Stock Floated on HOSE

Vietnam produces 1.2 million tonnes of pangasius a year. With the rate of 2.6 kilos of raw fish for a kilo of fillets, processing factories have to handle more than 700,000 tonnes of by-products each year. In recent years, processors only take swimming bladders and fish stomachs for food production while the rest is made into coarse fodders which are then mainly sold to foreign firms at very low prices. This is very wasteful.

 

Trisedco, founded in 2008 and headquartered in Vam Cong Industrial Park, An Thach Commune, Binh Thanh Commune, Lap Vo District, Dong Thap Province, specialises in producing fish meal, fish oil and refined fish oil. The company is capable of manufacturing 450 tonnes of fatty fishmeal and 100 tonnes of fish oil a day, thus becoming the leader of pangasius fish oil processing.

How to use by-products and optimise profitability in pangasius processing was a major concern of the Executive Board of Sao Mai Group for years. Mr Le Thanh Thuan, President of Sao Mai Group, went to many countries to seek solutions to this issue. He studied, selected and purchased technologies from leading European technology firm Desmet Group of Belgium. The company started construction on a US$25-million pangasius processing plant with a daily capacity of 200 tonnes in 2010 and put it into operation in October 2014. The first refined pangasius oil of the world, branded Ranee, was officially launched onto the market. Ranee premium fish oil, whose quality is very tightly controlled, has many very valuable natural nutrients good to human health, such as Omega 3, Omega 6, Omega 9, and A and E vitamins. The product is certified for food safety and hygiene and is recommended for use by the National Institute of Nutrition. With good and stable quality, Ranee fish oil has won the trust of domestic and international consumers after a short time being on the market.

 

Mr Le Quoc Truong, Deputy General Director in charge of business marketing and Ranee fish oil production, said fish oil sales reached over VND300 billion in the first nine months of 2015, including VND40 billion from exports, mainly to Singapore. He said, with a lot of advantages like differentiated product, wholly localised inputs, competitive prices, convenient delivery system, and easy market share expansion, sales are projected to be good in the remaining months of the year and hoped to end the year with over VND700 billion of revenue. With a broad untapped market scale plus the development of new products like nutritional oil for kids, mixed oil and shortening oil, the company expects a 20 percent revenue growth a year and 30 - 50 percent of revenue will come from exports.

 

Annually, Trisedco manufactures and sells more than 22,000 tonnes of products, of which a large proportion is fishmeal and fish fat. In 2014, the company made revenue of nearly VND400 billion and a net profit of more than VND11 billion. In 2015, Trisedco took over the fish oil refinery worth over VND500 billion from its parent company, IDI, and put into operation another fishmeal production line with a daily processing capacity of 150 tonnes. Hence, the company targets VND1,000 billion of revenue, a net profit of VND50 billion and a dividend rate of 10 percent in 2015.

 

Trisedco CEO Le Van Chinh said the region now has 15 plants processing fishmeal into inputs for animal feed production and Trisedco ranks third. The company’s advantage is its factory location near to 30 pangasius processing factories in a radius of 15 km. Trisedco also holds advantage over other rivals as it can form a self-contained input supply chain by leasing land at a low cost from its parent company, IDI, while it possesses a modern oil refining facility.

 

With the closed production process, from farm to fork, by-products are used up to bring a high profit margin for the company. Plus preferential policies of the Government for agricultural businesses and favourable impacts of the free trade agreements with ASEAN, the EU and TPP bloc, the company's products are more easily exported to other markets. To meet higher demand, the company plans to double the current production capacity.

 

According to the analysis report from Saigon Securities Inc (SSI), Trisedco is not as big as its listed peers like Vinh Hoan Corporation (ticker: VHC), Hung Vuong Corporation (ticker: HVG) and Cuu Long Fish Joint Stock Company (ticker: ACL) but its return on equity (ROE) is fairly high. When new plants are put into operation, the company’s revenue and profit are forecast to rise sharply. Its targeted annual revenue and profit growth of 20 percent from 2016 onwards are reachable. SSI added that the DAT share value as of June 30, 2015 was estimated at VND22,000, much higher than the initially listed price of VND13,000. This price was forecast to catch the interest of many investors.