Summary of the 2018 results of Binh Minh Plastic JSC (BMP VN)
2018 results: highlights
- Net revenue rose by 2.5% yoy, mostly due to a 2.0% increase in the average net selling price thanks to a change in the sales mix towards higher priced products. BMP’s total sales volume was roughly unchanged from 2017, amounting to 94,600 tons (+0.5% yoy).
- BMP’s gross margin fell to 22.2% from 24.1% as a result of higher material costs. Selling expenses in relation to net sales went up as the firm held the regular distributors conference. However, this was offset by lower administration expenses. The company’s operating profit fell by 8.0% yoy to VND 610bn. All in all, net profit declined to VND 428bn (-7.9% yoy).
- By the end of 2018, BMP maintained a healthy balance sheet with VND 412bn of cash and cash equivalent, accounting for 14.7% of total assets. The company didn’t have any long-term debts, while short-term debts were minimal compared to the firm’s equity base.
Outlook
- In our view, the correction of the real estate and construction sector is just temporary and should be seen as a normal phenomenon after a period of strong growth. In the long-term, the construction sector should perform solidly thanks to robust housing demand and the need for infrastructure development. We project the company’s top and bottom line to increase by 5.9% and by 11.5% yoy respectively in 2019.
- BMP’s 2018 net profit margin was at the lowest level in five years because of considerably increased competition. However, we think the environment will improve soon as BMP’s major competitor, HSG, is facing financial difficulties. Hence, the company’s net margin should recover to a reasonable level for a leading plastic pipe producer in Vietnam. We forecast the net profit CAGR for the 2019 – 2023 period to amount to 12.6% p.a.
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