Summary of the 2020 9M results of Vinamilk JSC (VNM VN)
9M/2020 results highlights:
- VNM’s total revenue reached VND45,211bn, up by 7.4% y/y. Domestic sales, which was the main market, were up by 7.7% y/y thanks to the consolidation of GTN, and VNM’s solid growth in the condensed milk and yogurt segment, which was driven by its affordability price range and health benefit perception, respectively. Overseas subsidiaries’ sales, declined by 7.2% y/y as schools in California were still closed, affecting Driftwood’s performance. The Middle East market performed well, +11.8% y/y.
- VNM’s gross margin was at 46.5%, down by 80bps y/y mostly due to a higher cost of powder milk price, purchased in during Q4/2019. Operational expenses as a percentage of sales stayed at 24.1% as VNM tightened its selling expense to compensate for 33.6% y/y increase in admin expenses, caused by the consolidation of GTN. VNM’s net financial income reached VND735bn, up by 60.6% y/y, thanks to a high cash level. As a result, VNM’s net profit increased by 7.4% y/y, while its net margin remained at 19.9%.
- VNM had a high cash balance, equivalent to 40.1% of total assets. The company’s leverage was only moderate with a D/E and a D/A of 0.21x and 0.13x respectively.
- In Q4/2020, the domestic market, excluding GTN, will grow by 2.5% y/y due to the tropical storm situation (including GTN consolidation, domestic market will grow by 8.1% y/y). Overall, VNM’s sale will grow by 8.5% y/y during this period. For 2020, we forecast sales to rise by 7.7% y/y, reaching VND60,662bn, thanks to similar growth drivers as in 9M 2020. The net profit is expected to rise by 12.2%, while the net margin will reach 19.5%, thanks to the higher net financial income (+69.7% y/y).
- As for 2021, we expect VNM to return to its long-term trend as Vietnam’s milk consumption per capital is still relatively low. Sales and profit are expected to rise by 6.1% and by 2.4%, respectively. Net margin will reduce by 70bps to 18.8% as some factories are no longer enjoy tax incentives.
Company ratings and target prices are accessible for clients only.
Our team is actively covering 50 companies in the listed Vietnamese equity space for our clients.
Featured image credit: vinamilk.com.vn