High rubber prices, GVR's business prospects are 'extremely bright', profit could reach nearly 4,000 billion VND

World rubber prices have surpassed the highest level in the past 3 years.

In early June, world rubber prices surpassed a three-year high of 183 US cents/kg. Although the market has adjusted slightly, compared to the beginning of this year, world rubber prices have still increased by 10.4%, reaching 172 US cents/kg.

The main driver of the increase in rubber prices is the shortage of natural rubber supply, especially from Thailand and Indonesia. The rubber production of these two countries, which account for 51% of the total global rubber production, is low. Meanwhile, demand from China has recovered strongly as the country has stepped up support for the automobile industry. At the same time, high crude oil prices have also supported the increase in natural rubber prices.

According to a report by the Association of Natural Rubber Producing Countries (ANRPC), the global natural rubber market will be short of 1.3 million tons by 2024, and the supply deficit may last until 2028 with a possible shortage of about 600,000 - 800,000 tons/year.

This makes global rubber prices expected to continue to stay high, possibly reaching 190 US cents/kg (equivalent to an increase of 10%) within the next 12 months.

In Vietnam, export rubber prices as of May 2024 have established an 8-month consecutive price increase with an increase of 2-4%/month.

Vietnam Rubber Industry Group - JSC (stock code GVR - HoSE) said that the average rubber price in the first 5 months of 2024 of the group is estimated at 38.4 million VND/ton, an increase of 6 million VND/ton, equivalent to an increase of nearly 17% compared to the average price for the whole year of 2023.

In early June, world rubber prices surpassed the highest level in the past 3 years.

With the current developments, KB Securities Vietnam (KBSV) believes that the selling price of Vietnamese rubber is expected to continue to increase and stay high in the second half of this year. Due to the characteristics of the crop, rubber exploitation takes place strongly from March to December every year, so the second quarter onwards is the time when Vietnamese rubber output reaches its peak.

Vietnam Rubber is currently the largest rubber enterprise in the country with a total planting area of ​​370,000 hectares. Of which, the rubber segment contributed about 60% of the group's total profit last year.

According to the plan of the Board of Directors of Vietnam Rubber Industry Group, the Group has set a target of consolidated revenue and other income in 2024 of VND 24,999 billion and pre-tax profit of VND 4,104 billion, both up more than 2% compared to the estimated level of 2023. The target of after-tax profit is only about VND 3,437 billion, almost unchanged compared to 2023.

Specifically, for the rubber sector, GVR aims to produce 445,200 tons of exploited rubber and consume 520,490 tons (including the amount purchased from outside); the average latex selling price is expected to be around VND 34.6 million/ton; and harvest 6,430 hectares of rubber wood.

For the wood processing sector, the output of all types of wood (wood blanks, laminated wood, refined wood, MDF wood), GVR sets the output target at 1.2 million m3.

For the industrial park business segment, the group aims to lease 245 hectares in 2024, equivalent to 468% of the estimated implementation level in 2023.

Vietnam Rubber's latex output is expected to peak from the quarter onwards.

GVR's revenue and profit forecast far exceeds the set plan

As of June 28, world rubber prices on exchanges have fluctuated continuously, but the general trend is that prices have increased compared to the same period last year. This has caused the prices of rubber cups and rubber latex in some provinces and cities in the country to increase sharply compared to the same period in 2023.

At some rubber companies, the current purchase price of raw rubber latex remains around 370-415 VND/TSC, an increase of about 100-150 VND/TSC compared to the same period in 2023. Of which, Phu Rieng Rubber Company quoted a purchase price of 360-415 VND/TSC; Ba Ria Rubber Company quoted a purchase price of 370-380 VND/TSC, an increase of 20 VND/TSC compared to the end of May 2024; Mang Yang Rubber Company quoted a purchase price of 382-386 VND/TSC.

Many rubber plantations have just started the season, so the yield is not much. In addition, due to the impact of prolonged dry weather, the yield is also lower than last year.

GVR earned about VND1,108 billion in pre-tax profit in the first 5 months of this year, up 32% over the same period in 2023, and completed 32.2% of this year's plan.

According to a recent announcement from the Vietnam Rubber Industry Group's board of directors, in the first 5 months of this year, the group's total rubber output reached 150,000 tons, reaching 29% of the yearly plan. GVR earned about VND 1,108 billion in pre-tax profit in the first 5 months of this year, up 32% over the same period in 2023, and completed 32.2% of the yearly plan.

Currently, many financial institutions assess that GVR's business prospects in the coming time will be very positive when the rubber price in the international market is high. The impact of the increase in rubber price is expected to be reflected more clearly in the business results of Vietnam Rubber in the second half of this year.

Based on current market factors, SSI Research recently estimated that a 1% increase in rubber prices will increase Vietnam Rubber's gross profit margin by 0.5%. Also according to SSI Research, GVR's average rubber selling price this year is expected to reach VND36.4 million, up 16% compared to 2023.

SSI Research also forecasts that GVR's revenue this year will reach VND24,500 billion and after-tax profit could reach VND3,700 billion, up 10.7% and 11.4% respectively compared to 2023, and far exceeding the plan that the group is setting out.

Source: https://danviet.vn/gia-cao-su-tang-cao-trien-vong-kinh-doanh-cuc-sang-cua-gvr-loi-nhuan-co-the-dat-gan-4000-ty-dong-20240628221723094.htm