Quang Ngai Sugar earns 700 billion VND in profit after tax in 4 months

Quang Ngai Sugar's pre-tax profit increased by 58%, which was the main driving force behind the company's after-tax profit increasing by 38% over the same period.

Dragon Capital Securities (VDSC) announced that in the first 4 months of the year, domestic sugar prices remained high compared to the same period last year, which was the main growth driver for both revenue and profit of Quang Ngai Sugar JSC (Code: QNS).

Sugar prices have increased due to the decision to impose anti-dumping duties on imported sugar and low sugar imports.

Quang Ngai Sugar affirmed that negative growth in sugar sales is a normal market development. In addition, the weak sugar consumption is also due to the fact that the company's orders with industrial customers (such as Vinamilk or Nestle) will fall in the second half of 2024 instead of the first half of the year like last year.

A report from VDSC shows that in the first 4 months of the year, Quang Ngai Sugar consumed 70,000 tons of sugar, down 7% over the same period in 2023. The company consumed 67 million liters of soy milk, down 1% over the same period last year. In terms of business results, in 4 months, QNS recorded total revenue of 3,500 billion, up 3% over the same period. Of which, the sugar segment brought in 1,395 billion (up 7%) and 1,130 billion was revenue from soy milk (down 4%). Pre-tax profit for 4 months increased by 38% over the same period to 805 billion, of which sugar profit increased by 58% to 395 billion, soy milk profit decreased by 2.5% to 190 billion. The company's net profit for 4 months reached 700 billion, up 35%. VDSC expects sugar prices to trade at levels similar to those in the second half of 2023 in 2024. Therefore, QNS will continue to benefit from the advantage of high sugar prices in the first half of 2024. Since sugar prices started to increase from June 2023, VDSC expects QNS to find it difficult to take advantage of the increase in sugar prices in the second half of 2024. As a result, positive growth in output will not offset the slowdown in price fluctuations. As the price gap is expected to narrow, the profit margin in 2024 of the sugar segment and Quang Ngai Sugar will not expand as much as in 2023. VDSC forecasts that soy milk sales will decrease by 5% in 2024. However, the 4-month results only decreased by 4%. In addition, soy milk consumption is expected to start recovering from the second half of 2024, corresponding to the recovery of the Vietnamese economy . QNS plans to launch two new nut milk products in June. Moreover, the company still maintains its leading position in the branded soy milk industry with a market share of 88.8% in the first quarter according to Nielsen. Soy milk profit margins are expected to increase slightly as QNS has completed soybean raw material contracts for the whole of 2024 with an estimated average cost (including the impact of increased exchange rates) of about 2-3% lower than in 2023. Nielsen expects Quang Ngai Sugar's full-year revenue to reach VND11,194 billion, up 12% year-on-year, and net profit of VND2,194 billion, equivalent to 2023.

Nhu Hang

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