Summary of the H1/2019 results of Tien Phong Plastic JSC (NTP VN)
H1/2019 results: highlights
- Net revenue was up by 20.2% yoy thanks to higher sales volume (+20.0% yoy). NTP managed to gain back market share due to the contraction of the plastic business of its main competitor (HSG). The company’s selling prices were stable during the period. The gross margin stayed unchanged as the cost structure remained the same compared to the same period of last year.
- Selling, General and Administrative Expenses (SG&A) as a percentage of net sales declined to 19.0% from 20.6%, mainly due to the economies of scale. Therefore, the H1/2019 operating margin also improved from 10.4% to 12.1%. NTP’s operating profit rose by 39.6% yoy.All in all, the company’s net profit amounted to VND 219bn (+46.2 yoy).
- By the end of H1, NTP had VND 204bn of cash and cash equivalents, accounting for 6.6% of total assets. Leverage ratio improved (D/E and D/A of 0.6x and of 0.4x) as working capital turnover was shortened.
- Our longer-term view on the Vietnamese market for plastic construction materials didn’t change from our last report and remains optimistic thanks to robust housing demand due to the population’s continued urbanization, and the need for infrastructure development and industrial construction.
- The competitive environment has improved for NTP due to deteriorating business prospects of its main competitor as mentioned above. In the longer run, we believe that NTP will remain the country’s top plastic pipe producer and that the company can further expand its market share thanks to its long-established brand name and its large distribution network. We forecast 2019 and 2020 net profit to amount to VND 400bn (+20.5% yoy) and to VND 442 (+10.5% yoy), respectively.
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