Company Quarterly Earnings Update – QNS VN – 2020 9M

Summary of the 2020 9M results of Quang Ngai Sugar JSC (QNS VN)

9M/2020 results highlights:
  • Overall, QNS’s sales declined to VND5,095bn (-15.8% y/y). While soymilk sales fell by 8.1% y/y due to weaker consumers’ spending during the pandemic, sugar’s sale declined by 35.6% y/y, caused by the country’s unfavorable weather this season. Other segments’ contribution was still insignificant. Overall, QNS’s net profit was 670.4bn, -16.9% y/y, while its net margin remained at 13.2%
  • QNS’s financial position remained solid. Cash made up 28.8% of total assets. Leverage was moderate with a D/E and a D/A of 0.26x and 0.18x, respectively.
Other development
  • The MOIT opened an anti-dumping probe into sugar imports from Thailand. If it found sufficient evidence, the anti-dumping duty would be imposed retroactively on imports within 90 days before the provisional anti-dumping duty is imposed. we expect the MOIT to announce a preliminary result by the end of this year.
  • We expect the consumption of non-essential products will remain weak in Q4/2020 and Q1/2021, due to the recent tropical storms in Vietnam’s central region, before normalizing for the rest of 2021. For 2020, QNS’s revenue is expected to decline by 13.2% y/y, reaching VND6,631bn. As a result, the bottom line will fall to VND1,050bn (-15.1% y/y), while its net margin is at 15.8% (-60bps y/y).
  • Generally, we expect QNS’s business will be normalized in 2021. The preimmunization trend will benefit the soymilk’s segment, and the new RE sugar will tap into the country’s shortage. Both will enable QNS’s revenue and profit to recover by +40.6% y/y, and 13.2% y/y, respectively. However, the net margin will reduce to 13.0% as sugar and biomass will contribute more to QNS’s total sales.

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