Summary of the 2021 results of Quang Ngai Sugar JSC (QNS VN)
2021 Results: Highlights
- QNS’s net revenue and net profit grew by 13.0% and 18.3% y/y, respectively, to reach VND7,335bn and VND1,242bn.
- Soy milk: sales volume is 270 mn liters (+8.0% y/y), with a higher contribution of low average selling price (ASP) items, resulting in a +5.6% y/y net revenue (accounting for 55.8% of total sales), in line with our forecast. QNS boosted their market share to 91% thanks to (1) consumers switching to QNS’s affordable products during the pandemic, (2) product innovation and a high market consumption of new soymilk flavors.
- Sugar segment: revenue jumped by 59.3% y/y to VND1,584bn, making up 21.6% of the total, driven by (1) a 23.6% y/y rise in total sales volume, (2) sugar’s ASP soared by 41.8% y/y thanks to tariffs on Thai’s sugar and the global sugar prices’ strong rise. Others (biomass, confectionary, beer, mineral water, etc.) posted a 2.5% y/y growth.
- The financial position remains solid with high cash levels (41.5% of total assets), and low leverage (D/E and D/A ratios of 0.29x and 0.21x, respectively).
Outlook 2022-2023
- For 2022: According to Wallet Investor, USDA, soybean prices are projected to remain high due to (1) lower production in Brazil, Argentina caused by dry weather, (2) the higher price of oil & gas, leading to high transportation costs. Sugar prices will also stay at high levels due to a global deficit and rebounding confectionary demand after COVID-19 as well as sugarcane demand for ethanol production in India, Brazil and the EU. QNS has secured enough input materials for 2022, at prices that are roughly 10% higher than those of 2021. However, QNS raised its ASP by 5% y/y in February 2022, thus we predict a flat gross margin in 2022.
- Revenue and net profit are expected to grow by 31.5% y/y and 20.1% y/y, respectively, to VND9,648bn and VND1,492bn. The key growth drivers are: (1) a higher soymilk’ market share and ASP, (2) significant growth in sugar sales driven by a 32.0% sugarcane area expansion, combined with RE sugar’s increased contribution from a low base in 2021, and (3) a higher sugar margin thanks to better mill utilization rates.
- For 2023: net revenue and net profit are expected to grow by 17.2% and 13.1% y/y, respectively to VND11,310bn and VND1,687bn.
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