Company Quarterly Earnings Update – QNS VN – 2021 9M

Summary of the 2021 9M results of Quang Ngai Sugar JSC (QNS VN)

9M/2021 results: highlights

  • QNS’s net revenue grew by 13.4% y/y to VND5,776bn (vs -7.1% y/y of FMCG), net profit recorded at VND869bn, up 29.7% y/y. Soymilk sales, a major contribution of 56.0% of total sales, grew by 5.9% y/y to VND3,234bn, with market share growing to 91.0% in Q3/2021 (+400 bps vs early 2020) thanks to many new flavored soymilk products have been well accepted by the market. Sugar sales, accounting for 21.5% of the total, increased sharply by 51.6% y/y to VND1,239bn, thanks to +24.1% y/y of the sales volume and +22.2% y/y of the average selling price (ASP).
  • Despite the strong increase in volume and revenue, biomass electricity’s utilization is still low (est.~39.2%), making it unprofitable. During the COVID-19, the other segment posted a negative growth rate of approximately 1.7% y/y.
  • The financial position remains solid with cash of 40.3% of total assets, as well as a D/E and a D/A of 0.24x and 0.17x, respectively.

Outlook 2021-2022

  • For 2021: Despite a better soymilk performance due to higher market share and higher sales volume of 270 million liters (est.+16.7% y/y), revenue is revised down solely due to lower Extra Refined (RE) sugar sales as well as the loss in the biomass segment. As a result, we slightly lower our net profit estimate by 1.6% to VND1,168bn (+11.2% y/y).
  • For 2022: We forecast revenue and net profit to grow by 25.7% y/y and 29.7% y/y, to VND10,479bn and VND1,515bn respectively, (revised up 7.3% and 7.9% respectively, compared to our latest projection). Key growth drivers are: (1) higher soymilk market share, and lower 2022F input soybean price, (2) a significant growth of 39.2% y/y in sugar sales volume, leading to greater utilization rate of sugar mills, which is also encouraged by an upward trend in sugar selling price, and (3) Biomass electricity is expected to be profitable, with gross margin of 0.7% (vs -11.9% in 2021).

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