Summary of the Q1/2022 results of Phuoc Hoa Rubber JSC (PHR VN)
Q1/2022 Results: highlights
- Net revenue advanced 30.5% y/y to reach VND365bn thanks to a strong sales growth of 33.1% from the rubber business. On the other hand, sales of the industrial park (IP) development business declined 11.7% y/y due to limited land bank inventory.
- The operating margin declined from 12.9% to 7.8% due to a higher sales contribution from the rubber business which has a lower margin than the IP business. Accordingly, operating profit decreased by 21.0% y/y to VND28.5bn. Contrastingly, other net income surged from VND39bn to VND309bn thanks to the income from selling rubber land. All in all, net profit jumped more than three time to VND295bn in Q1/2022.
- PHR currently have five IP projects in the pipeline. In Jan 2022, VSIP 3 IP acquired final approval needed and is presently under construction. On the other hand, other projects have not received operating licenses yet.
- By the end Q1/2022, PHR has amassed a total of VND2,216bn in cash and cash equivalent, making up 36.1% of total assets. Its financial position was strong with low debt ratios with a D/E ratio of 0.11x and a D/A ratio of 0.06x.
- Natural rubber business: We expect rubber prices to plateau in 2022 and 2023 as a combined impact of weakening global demand and rising production costs for natural rubber coming into effect. However, the rubber business will only play a relatively minor role in PHR’s income stream over the next 5 years.
- IP development business: As per current pipelines, this business line will generate minimal revenue for PHR in 2022 and 2023, yet it will generate strong growth from 2024 onwards. PHR will book an extraordinary income of VND898bn from selling rubber land to VSIP 3 in 2022 and 2023. Accordingly, we expect its net profit to jump to VND1,030bn in 2022, before declining to VND758bn in 2023. From 2024 onwards, we expect PHR’s other IP projects to begin being leased, generating significant income for PHR. We forecast PHR’s net profit will grow with a CAGR of 47.9% during 2023-2026.
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