BAF – PAYING 17% DIVIDENDS & PUBLIC OFFERING TO INCREASE CHARTER CAPITAL TO VND 2,435 BILLION

On May 10th, 2023, BAF Vietnam Agriculture Joint Stock Company (BAF, Company) successfully held Annual Shareholders’ Meeting (AGM) in 2023 at Sofitel Saigon Plaza Hotel – 17 Le Duan Street, District 1, Ho Chi Minh City. BAF sets a target of VND 6,914 billion in net revenue, a 16% increase in after-tax profit of VND 301 billion, a 5% increase, and a dividend payout of 17% in the form of shares.

In the past year, the livestock industry has faced many difficulties when dealing with issues related to diseases and broken input supply chains, while the selling price of pork has continuously decreased for a long time. In addition, exchange and interest rates have affected companies’ business operations.

However, this year has grown in the scale of BAF as it rises to the position of the country’s Top 5 largest pig farming companies. In terms of FEED, the Company has put into operation 3 “Vegetarian” feed factories producing vegetable source livestock feed without any harmful substances to ensure nutrition for livestock. The 3 factories have a capacity of about 460,000 tons/year and have achieved the highest global certifications in Animal feed production quality management systems: GLOBAL GAP CFM 3.0 and FSSC 22000 Ver 5.1.

In terms of FARM, a series of farms have been put into operation, and construction has begun to increase the number of farms operating and deployed to 23 farms. BAF’s closed farm system applies modern European technology, an automatic feeding system through a central control system to minimize contact between humans and animals, limit diseases, significantly reduce labor costs, and achieve a water circulation rate of 95%. As of the end of 2022, BAF’s total herd reached 200,000 pigs (17,000 sows and 120,000 market hogs), a strong increase compared to the beginning of the year.

In the FOOD sector, the high-quality BAF Meat Vegetarian-fed Pork product has been successfully launched, using entirely plant protein sources. The distribution chain has been continuously expanded with over 60 Siba Food stores and over 300 Meat Shops throughout Vietnam. The total amount of pork sold in 2022 reached over 303,500 pigs, nearly doubling that of the same period.

According to the consolidated financial report for 2022 audited by Ernst & Young Vietnam Co., Ltd., the total net revenue for the year reached VND 7,083 billion from livestock activities and agricultural product sales, completing 119% of the annual plan. The income from livestock activities reached nearly VND 1,373 billion, an increase of nearly 80% compared to the same period. The revenue structure has shifted significantly, with revenue from livestock activities accounting for nearly 19% of total revenue, compared to 7% in the same period, affirming the transformation in the strategy to become a leading modern livestock corporation in Vietnam based on the 3F model. The audited PAT and PBT were VND 338 billion and VND 288 billion, respectively.

The AGM approved the 2023 production and business plan, with a net revenue plan of VND 6,914 billion, a 16% increase compared to the 2022 plan. For the PAT plan, the GMS set a goal of VND 301 billion, a 5% increase over the 2022 result. With the development of the farm scale, the estimated number of pigs sold in 2023 is 348,770, an increase of 14% compared to the 2022 result.

This year’s General Meeting approved a dividend payout ratio of 17% in shares. This is a high dividend payout ratio in the context of concentrating resources to develop the farm system and distribution chain. In addition, the General Meeting also approved the issuance of a 5% ESOP and a public offering to existing shareholders at a ratio of 100:47 (47.677%) for VND 10,000 per share. The expected total amount of funds raised is VND 750 billion, increasing the charter capital to VND 2,435 billion. The funds raised from the issuance will supplement capital for livestock operations and agricultural business and contribute capital to subsidiaries to build farms.

To increase transparency, the General Meeting approved a list of “Big 4” audit firms to continue auditing the 2023 financial statements.

In 2023, the company’s Board of Directors aims to accelerate the operation of seven farms and continue to commence construction on six additional farms according to the strategy of expanding the scale of the livestock farms. The total herd by the end of 2023 is expected to reach 337,000 pigs, doubling the figure from the same period before. The company plans to establish a supply chain with small farmers, including providing breeding pigs, animal feed, support for livestock feed, biological safety for farms, and purchasing products from farmers. They also plan to increase retail pork sales through trading channels to maximize profits and sell feed along with breeding pigs to optimize the capacity of the feed mill.

In the Q&A section, Mr. Truong Sy Ba, the Chairman of the company’s Board of Directors, stated that Vietnam’s total pig herd has decreased by 20-25% due to the recent ASF epidemic. Furthermore, the low trading price of pork has caused many farmers to sell off their pigs and restrict breeding, leading to an increase in the cost of pig breeding to 53,000-54,000 VND/kg. The company, BAF, has implemented effective biosecurity measures to minimize the epidemic’s impact, resulting in the cost of pig breeding remaining around 45,000 VND/kg. However, under the epidemic’s effect, the price of pork is expected to rise again in the coming months. BAF is actively expanding the scale of its pig herd to take advantage of the upcoming price increase. They plan to continue developing their modern farm system and operate nine additional farms by the end of 2024. The estimated total herd will be 90,000 breeding pigs and 2.2 million market pigs.