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Japfa expecting rebound in pork business in Vietnam, but volatility may persist

Chan Chao Peh
Chan Chao Peh8/21/2017 08:00 AM GMT+08  • 6 min read
Japfa expecting rebound in pork business in Vietnam, but volatility may persist
(Aug 21): One has to be as nimble when investing in upstream food commodity companies as in companies in the semiconductor supply chain. Demand for both is highly cyclical: Profit margins expand and contract swiftly, and earnings in one quarter can quickl
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(Aug 21): One has to be as nimble when investing in upstream food commodity companies as in companies in the semiconductor supply chain. Demand for both is highly cyclical: Profit margins expand and contract swiftly, and earnings in one quarter can quickly give way to losses in the next.

Tan Yong Nang, CEO of Japfa, which produces milk, poultry and pork, says he does not know enough about the semiconductor business to comment on the similarities. But he highlights one stark difference. While farming techniques keep evolving and costs are constantly being pushed lower, people will never stop consuming food.

“Technology obsolescence is something we don’t have to deal with,” he tells The Edge Singapore in a recent interview. Another difference is that Japfa’s profitability is likely to become more stable once it achieves scale and a more diverse customer base. “We haven’t reached that stability in our revenue and earnings yet,” Tan says.

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