Why is Quang Ngai Road planning "less sweet"?


As the “big man” of the sugar industry, with a revenue of trillion, Quang Ngai Sugar Joint Stock Company (QNS-UpCom) has a rather conservative plan for 2018.

In 2018, Quang Ngai Sugar only sets a net profit target of 194 billion dong, while the realized figure in 2017 is over 1,000 billion dong.

The goal is reserved

QNS’s revenue plan submitted to the Annual General Meeting of Shareholders 2018 sets a revenue target of 7,500 billion VND, a slight decrease compared to the previous year. Profit after tax is about 194 billion dong. With this interest rate, QNS estimates that 2018 dividend payment is not lower than the rate of 15% / charter capital.

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This figure is quite low compared to 2017. In 2017, QNS reached 7,738 billion VND in revenue, profit after tax reached over 1,026 billion VND.

At the same time, QNS also plans to issue nearly 49 million additional shares to increase capital from over VND 2,438 billion to nearly VND 3,000 billion. Issued capital is deducted from the 2017 undistributed net profit with the plan to pay stock dividend, ratio of 20%. The proceeds are used to serve production and business activities of QNS.

In 2017, Quang Ngai Sugar increased its charter capital from VND 1,875 billion to VND 2,438 billion by the method of issuing shares to pay dividends in 2016 (the rate of 30% / existing share). During the year, QNS also pays the remaining dividends of 2016 at the rate of 10% divided into two phases in August 2017 and January 2018.

Great challenge

According to securities companies, QNS still has a relatively high profit margin compared to other companies in the same industry thanks to the success of soy milk products.

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However, since 2016, the competitive pressure in the market has increased significantly, causing the company’s output growth to decline. The “throne” of Fami and VinaSoy – two brands under Quang Ngai Road is also threatened with many new recruits joining.

According to VCSC, another risk compared to Quang Ngai Sugar is product innovation. As Quang Ngai Sugar has a market share of 84% in the branded soymilk market, the outlook for this business segment will depend on its ability to attract consumers to switch from unbranded soy milk to pepper. branded products.

Meanwhile, the sugar segment, which accounts for nearly 30% of the revenue structure, was significantly affected by the drop in world sugar prices. From 2018, Vietnam will abolish tariff quotas on sugar products under the ATIGA agreement. This means that Thai sugar, which has a lower production cost, will “spill” into Vietnam and compete directly with domestic products. Many experts say, the sugar industry in general is in trouble. The hardship is not only due to the reduction of the import tax rate of sugar from the ASEAN countries, but also the hardship due to the smuggled sugar and high domestic production costs.

Stocks in the sugar industry also performed less positively recently. Although QNS still has a high profit margin, it still cannot escape the general trend of the market. As the “big man” of the sugar industry, QNS was once “cult” with the stock price exceeding 100,000 VND, now the price is about 60,000 VND after dropping to 45,000 VND and increasing again perhaps partly thanks to domestic shareholders. subscriptions purchased.

Tien Minh
* Source: Business Forum

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