Company Quarterly Earnings Update – BMP VN – 2021 H1

Published On - August 23, 2021

TIM COMPANY RESEARCH

Summary of the 2021 H1 results of Binh Minh Plastic JSC (BMP VN)

H1/2021 result highlights

  • Revenue was VND2,606bn, +14.8% y/y. The total volume of sales was 55,828 tons, which translates to an increase of 3.4% y/y. The average selling price increased by 11.0% y/y as BMP transferred part of their high input costs into the selling prices.
  • Gross profit margin declined to 15.1% (from 26.4% in H1/2020) due to a surge in raw materials in H1/2021. To support the growth in sales volumes, BMP increased their selling prices at a slower pace than raw material prices, causing the gross profit margin to narrow. Overall, BMP’s net profit amounted to VND126bn, -51.4% y/y.
  • BMP’s financial position remained solid with cash and cash equivalent account for 32.2% of total assets. Leverage was minimal with D/E and D/A both at 0.02x.

Outlook

The 4th wave of COVID-19 has negatively impacted the demand for domestic construction as several cities and provinces, mainly in Southern Vietnam, have entered lockdown. As BMP’s primary market is in the South, we project that the company’s sales volume in July and August will drop by 40-50% y/y before returning to normal levels by September, causing a sharp drop in Q3/2021 revenue. With the current strong measures being imposed and the vaccination process speeding up, we expect that the lockdown measures will be eased from September, supporting a strong recovery in Q4/2021 revenue as suspended projects resume.

Looking beyond the COVID-19, we maintain our positive outlook on the demand for plastic pipes in Vietnam thanks to Vietnam’s continuing trend of urbanization, and the rising recognized need for upgrading the water supply and wastewater treatment systems in Vietnam.

  • For 2021: Net revenue is projected at VND4,904bn (+4.7% y/y). The gross margin will decrease to 18.7% due to the high material costs in H1/2021, resulting in a net profit of VND394bn, -24.6% y/y.
  • For 2022: Net revenue is projected to be VND5,124bn (+4.5% y/y) which is a combination of a 10% increase in the sales volume and a decrease of 5% in the average selling prices. The gross margin will normalize to 22.6% thanks to lower material costs. Net profit will reach VND543bn, +37.7% y/y.

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