Company Quarterly Earnings Update – BMP VN – Q3 2022

Summary of the Q3/2022 results and outlook of Binh Minh Plastic (BMP VN)

  • Net sales rose 40.5% y/y to VND4,400bn thanks to a 26.5% y/y increase in the average selling prices, which have remained unchanged since the previous hike in November 2021. BMP’s total sales volume increased by 11.0% y/y to 74,031 tons from 2021’s low base due to the lockdown at that time.
  • BMP’s gross margin increased from 13.3% to 25.7%. In Q3/2022, BMP’s gross margin grew to 28.3% which reflected a decline of PVC prices (polyvinyl chloride), a key material. SG&A expenses in relation to net sales rose from 8.2% to 11.1% mostly due to higher commissions to distributors. Net profit reached VND448bn (+348.7% y/y).
  • BMP maintained a very healthy balance sheet with total cash and short-term deposits amounting to VND1,255bn (41.0% of total assets), while leveraging was very low with D/E and D/A ratios both at 0.02x.
  • Dividend payment: The 1st of December is the payment date for the first cash dividend of 2022 at VND3,100/share (Ex-date: 26 October). Given BMP’s large cash position and limited CAPEX plan, FY2022’s payout ratio may be as high as 100% as seen over the last 3 years.
  • In Q4/2022, BMP may reduce its selling price following price cuts from its peer, NTP, but profitability should remain similar to Q3 as PVC prices have dropped further from Q3’s cost level. Currently, PVC prices in Southeast Asia have plummeted to $800/ton due to aggressive offers from China and the US amid weak demand in their home countries. The benefit of PVC decline will however be partially offset by the recent VND depreciation against the USD (in October, -4.0%). Overall, 2022 net profit is likely to reach VND626bn (+192.3% y/y), 6.4% higher than our previous projection.
  • For 2023, the total sales volume will be solid with growth of 8.4% y/y similar to that of the construction sector. BMP’s main output, PVC pipes, are for private households to build or repair, for which demand is resilient. Meanwhile, the government pushes infrastructure investment, which will help HDPE sales. The selling price is projected to decline 16.7% y/y due to lower PVC prices. As China gradually eases its Covid rules, PVC prices may be higher toward year’s end, however, the average price will still be 20.3% lower year-on-year. Net profit is forecast to be VND564bn (-9.9% y/y).
  • In general, during 2022-2023, BMP benefits from the fall in PVC prices with EBITDA/ton reaching VND10.7mn and VND8.8mn respectively, before normalizing to VND7.9mn in 2024-2027.

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