Domestic sugar cane businesses have prepared to receive opportunities from the world’s supply shortage. Photo: Quy Hoa
Sugar prices have consistently broken their peak, which is excellent news for Quang Ngai Sugar JSC. First and foremost, this company benefits from the greatest sugarcane area in the country when its stock price rises by 60% after 10 months.
After meeting 87% of revenue targets and surpassing 25% of the annual profit plan, net revenue in the first eight months of the year was VND 7,200 billion, and pre-tax profit was VND 1,500 billion, up 26% and 74%, respectively, over the same period.
Breaking the top
The company presently owns several brands, including Quang Ngai sugar, Thach Bich mineral water, Dung Quat beer, Biscafun sweets, Vinasoy, and Fami… According to the company’s leaders, consumption of milk products, mineral water, beer, and somewhat reduced confectionary.
Meanwhile, due to the benefits of increased sugar prices, QNS’s sugar business was the key profit growth driver in the first eight months of the year, with net revenue of VND 2,900 billion and pre-tax profit of VND 670 billion, a rise of 118% and 335% over the same period.
The global supply deficit has opened doors for domestic sugar cane companies. The second-biggest sugarcane region in the country, QNS has An Khe Sugar Factory, 18,000 tons/day sugarcane crushing capacity, and 1,000 tons/day refined sugar production line. It accounts for 13% of the sugar market share. For example, the company’s sugar production costs 15% less than the national average.
QNS perfected a closed manufacturing chain to maximize by-product revenue. The firm uses bagasse after sugar manufacturing to generate electricity. Moreover, the State’s sugar trade defense measures and smuggled sugar control boost the company’s sugar production and trading efficiency.
When sugar prices drop owing to domestic sugarcane crushing, QNS’s company may suffer. In addition, a specific consumption tax on sugar-sweetened beverages (excluding milk and nutritious drinks) might reduce domestic sugar consumption. QNS may have to lower sugar product pricing to gain domestic market share by entering contemporary retail channels, according to Mirae Asset Vietnam Securities Company.
Further vision for soy milk
With 390 million liters/year of canned soy milk capacity and 87% of the branded soy milk market, QNS dominates with several plants. In 2022, soy milk will account for 52% of QNS’s income, generating VND 4,305 billion and roughly VND 1,752 billion in gross profit.
This year, QNS’s 8-month net sales were VND 2,800 billion (down 8%) and pre-tax profit was VND 550 billion (up 3%) due to the soy milk segment’s poor performance. In response to consumer spending cuts, soy milk consumption fell 11% to 162 million liters. The soy milk category had lower results and higher selling expenses, which might slow profit growth in the third quarter of 2023, according to SSI Research. In 2024, limited domestic demand will keep soy milk consumption stagnant.
QNS has numerous plant-based nutrition goals including Vinasoy and Fami. Despite demand issues, long-term potential drives expansion. In 2020–2024, CoBank and Nielsen predict 10.5% growth in Vietnamese soy milk demand.
Around the world, plant nutrition is gaining popularity. This market will grow five times to $162 billion by 2030, according to Kantar Singapore. APAC accounts for 40% of growth, and Vietnam is a leader.
Besides, the Company wants to expand the Fami soy milk brand to foreign markets such as Japan, China, America and Korea. On the other hand, Mr. Ngo Van Tu, CEO of Vinasoy, said that the Company is expanding its ecosystem of plant nutrition products, plant “meat”… Therefore, Fami – a soy milk brand Vinasoy’s flagship – has also just announced its new brand identity “More plant protein, more balanced life”.
KIS Securities Company forecasts that QNS’s revenue will increase to VND 10,069 billion and profit after tax to reach VND 1,680 billion in 2023, up 22% and 31% respectively over the same period, of which soy milk revenue will decrease by 6%; on the contrary, sugar revenue will increase sharply by 85%. By 2024, KIS forecasts that revenue and profit after tax will be flat, reaching over VND 10 trillion and VND 1,635 billion, respectively.
