RMS Partners

Equities | Vietnam | Consumer Staples - F&B, Tobacco

Quang Ngai Sugar (QNS - UPCoM)

Flashnote

31 March 2025

Source: Company, HSC Research estimates

Share price performance

Source: Company, FactSet

Summary financials and valuation

Year end: Dec	12-24A	12-25F	12-26F
Net sales (VNDbn)	10,243	11,316	11,973
EBITDA adj. (VNDbn)	2,825	3,135	3,328
Pre-tax profit (VNDbn)	2,646	2,891	3,155
Net profit adj. (VNDbn)	2,377	2,612	2,856
FCF (VNDbn)	1,779	2,780	2,790
EPS adj. (VND)	7,683	8,284	9,152
DPS (VND)	4,000	4,000	4,000
BVPS (VND)	32,650	36,983	42,695
EBITDA adj. growth (%)	8.68	11.0	6.15
EPS growth adj. (%)	7.13	7.82	10.5
DPS growth (%)	14.3	0	0
EBITDA adj. margin (%)	27.6	27.7	27.8
Pre-tax margin (%)	25.8	25.6	26.4
Net margin adj. (%)	23.2	23.1	23.9
Div. payout ratio (%)	52.1	48.3	43.7
Net debt/equity (%)	22.3	9.27	7.96
ROAE (%)	25.6	24.2	23.0
Return on avg. CE (%)	25.1	23.8	22.4
EV/sales (x)	1.67	1.41	1.33
EV/EBITDA adj. (x)	6.05	5.09	4.79
P/E adj. (x)	6.22	5.77	5.22
P/B (x)	1.46	1.29	1.12
Dividend yield (%)	8.37	8.37	8.37

Source: Bloomberg, HSC Research estimates

Company description

QNS’s main business includes soymilk and sugar. The company is the leading player in soymilk industry, accounting for 85% market share under “Fami”, “Vinasoy” brand.

AGM: Positive on soymilk, sugar duties should remain

FY24 cash dividend remain unchanged at VND4,000/share (div. yield of 8.4%).
Management expects soymilk sales growth of 5-10% in FY25. They strongly believe that the MOIT will extend anti-dumping duty and anti-subsidy duties to sugar imported from Thailand and five other ASEAN countries, which will expire on 15 Jun-26.
Regarding the newly approved ethanol business, management expects a payback period of 7-8 years with a total investment of VND1,741bn.
Our rating and TP are under review.

Event: AGM held on 29 March

QNS held its AGM on 29 March. The meeting was well attended, and shareholders approved all the proposals. Key takeaways are as follows:

FY25 targets are set at VND10,000bn for total revenue (which also includes financial income and other income), down 6% y/y and VND1,790bn for net profit, down 25% y/y. The net targets were 15% and 32% below our forecasts for net sales and net profit, respectively.

QNS usually sets low profit targets each year, and actual profits always far exceed targets. In FY24, actual net profit of VND2,377bn surpassed their target of VND1,341bn by 77%.

Shareholders approved an FY24 cash dividend of VND4,000/share (unchanged y/y), equivalent to a payout ratio of 62% and a dividend yield of 8.4%. QNS already paid VND2,000/share, the balance of VND2,000/share will be paid on 25 April, with 15 April set as the closing date. For FY25, the cash dividend should be at minimum VND1,500/share, as usual.
Shareholders also approved for a proposal for ESOP issuance at 1-3% of total shares outstanding at the time of issuance if FY25 net profit plus depreciation growth reaches 7.5% or above.

As per our forecasts, it is unlikely that the company will achieve the above condition and issue ESOP shares for FY25. We notice that FY24 actual results also failed the ESOP issuance condition set by last year’s AGM.

Soymilk: Management expects sales growth of 5-10%

Even though the overall purchasing power has not recovered yet, QNS’s management expects that its soymilk sales will increase 5-10% in FY25, thanks to market share gain momentum since FY24.

According to management, QNS maintained its top position in the branded soymilk industry, with its market share increasing by over 1% to reach 90.6% in 2024.

(Continued on page 2)

Figure 1: QNS’s FY25F business plan

The company set low targets as usual

VND	FY24	FY25F targets	Growth y/y	FY25F forecasts	Targets vs. forecasts
Total revenue	10,668	10,000	-6.3%	11,776	-15.1%
Profit before tax	2,645	2,000	-24.4%	2,891	-30.8%
Profit after tax	2,377	1,790	-24.7%	2,612	-31.5%

Note: Total revenue = gross sales + financial income + other income

Source: QNS, HSC Research estimates

Sugar: Management believes that anti-dumping duty and anti-subsidy duties will be extended

QNS’s management strongly believes that Vietnam’s Ministry of Industry and Trade (MOIT) will extend anti-dumping tax and anti-subsidy tax to sugar imported from Thailand and five other ASEAN countries. As a reminder:

On 15 Jun-21, MOIT decided to impose anti-dumping duties of 42.99% and anti-subsidy duties of 4.65% on sugar products imported directly from Thailand for a period of 5 years from 16 Jun-21 to 15 Jun-26.
Then on 1 Aug-22, in response to Thai sugar being routed through other ASEAN countries to evade duties, the MOIT imposed a combined anti-dumping and anti-circumvention duty of 47.64% on sugar imports from Laos, Cambodia, Indonesia, Malaysia and Myanmar. These measures were effective from 9- Aug-22 and are set to end 15 Jun-26.
On 3 Aug-23, MOIT adjusted the duties for some Thai companies, following a review. Accordingly, Mitr Phol Sugar Corp., Ltd. and its four affiliates imposed anti-dumping duties of 32.75%, Thai Roong Ruang Industry Co., Ltd. and its five affiliates imposed anti-dumping duties of 25.73% and anti-subsidy duties of 4.65%

For QNS’s sugar business, in the 2024/25 crushing season, sugarcane volume used in production is expected to grow 7% y/y to 2.1mn tonnes, following an increase of 3,000 hectares in sugarcane area to 32,000 hectares from 29,000 hectares in previous season. Sugar volume processed from sugarcane is estimated at 235,000 tonnes, up 9% y/y. In addition, YTD QNS imported 20,000 tonnes of raw sugar to process RE sugar. As a result, total production volume will come to 255,000 tonnes, up 19% y/y.

New business ethanol: Payback period of 7-8 years

Regarding the newly approved ethanol business, which was approved by the BOD earlier this year, management expects a payback period of 7-8 years on a total investment of VND1,741bn. As a reminder, the project will have:

An ethanol capacity of 200,000 litres/day. Management said that the line can operate with either 100% ethanol or a blend of 70% ethanol and 30% food-grade alcohol. The line is fully automated, generates no wastewater, and ensures emissions comply with environmental regulations.
A 7.5MW power generator, with 2.7MW supplied to the national grid.

The project is scheduled for completion within 2 years from 16 Nov-25 to 15 Nov-27. This project has not incorporated in our earnings model yet. Our rating and TP are under review.

Financial statements and key data

Note: *Excluding short-term investments.

Source: Company, HSC Research estimates

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Explanation of Institutional Equity Research Ratings

Buy: Expected to rise by more than 20% on an absolute basis in the next 12 months

Add: Expected to rise by between 5% and 20% on an absolute basis in the next 12 months

Hold: Expected to rise or decline by less than 5% on an absolute basis in the next 12 months

Reduce: Expected to decline by between 5% and 20% on an absolute basis in the next 12 months

Sell: Expected to decline by more than 20% on an absolute basis in the next 12 months

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