Vietnam’s soy milk sector on a growth trajectory:
- According to Nielsen’s latest 2018 study, 37% of Vietnamese consumers consider health to be among their top two concerns, while 90% are concerned about the long-term health impact of artifical ingredients and 76% want to know everything that goes into their food. The numbers are quite remarkable and food and beverage producers must position their products according to consumers demands.
- Soy milk is an important traditional beverage in Vietnam and it is increasingly known to consumers as rich in carbohydrates, fats, minerals, proteins, vitamins and other nutrients which makes it a valid alternative to animal farmed milk.
- Vietnam’s soy milk consumption is still at a low base with only 7 liter per capita Thailand with 13 liter and China with 10 liter per capita.
- Euromonitor International expects that branded soy milk consumption will grow by a CAGR of 10.1% during the period 2017-2021
The company:
- QNS (QNS VN) is Vietnam’s largest branded soy milk producer with a consistent market share of 86%
- QNS through its three main soy milk brands Vinasoy, Fami and Soymen offers 12 products to the Vietnamese consumers fully satisfying their demands for soy milk products
- QNS’s soy milk unit has been producing attractive gross margin of around 40% over the last years partially because the process of growing soy beans, harvesting, production and selling to Vietnamese consumers is a fully local supply chain.
- QNS operates 3 soy milk factories in the North (Bac Ninh province), Central (Quang Ngai province), and the South of Vietnam (Binh Duong province)
- QNS is distributing their produts through over 150,000 points of sales, reaching all the 63 provinces in Vietnam. With that they will remain in a pole position while continuing to be innovative with more product variants and marketing initiatives.
- Vietnam’s expected consumption transition from unbranded products to branded ones is likely to be the main growth driver as home-made unbranded products currently still account for more than 70% of total soy milk consumption.
- Last but not least the boom of modern retail channels will also have a positive impact on QNS’s sales where they have a strong product presence (the number of convenience stores quadrupled since 2012).
Recommendation:
At the time of writing, the trading price is VND 43,200 from where we see considerable price upside over the next 6 – 12 months.
If you are interested in getting more information about QNS (QNS VN), feel free to get in touch with us at your convenience. Besides QNS, our team is actively covering 50 companies in the listed Vietnamese equity space for our clients.
Featured image credit: nhandan.org.vn