• We attended QNS’s 2024 AGM in Quang Ngai Province on March 30. The meeting focused on the company’s business outlook for 2024, in which we see that management’s expectations are more positive than business guidance and the expectations are broadly in line with our projections. We see no material risk to our current forecasts, pending a fuller review.
• 2024 business guidance includes revenue of VND9.0tn (USD336mn; -12% YoY) and NPAT of VND1.3tn (USD54mn; -36% YoY), representing 87% and 62% of our respective forecasts. We note that QNS has a history of setting conservative guidance. Specifically, QNS’s actual NPAT exceeded its guidance by 28% in 2022 and 116% in 2023.
• Shareholders approved the last cash dividend for FY2023 of VND2,000/share (yield of 4.0%); the record and payment dates for this dividend are April 17 and April 26, respectively. Including this amount, the FY2023 cash dividend will total VND4,000/share (yield of 8.1%).
• FY2024 dividend (either cash or stock): At least 15% on par value.
• ESOP FY2023: QNS will issue 10.7 million share or 3% issuance rate, at a price equivalent to QNS’s book value as of YE2023 (VND28,400/share in our estimate).
• ESOP FY2024: QNS will issue (1) 1% of its outstanding shares if total YoY growth in net profit before depreciation ranges from 7.5% to 15%, (2) 2% of its outstanding shares if YoY growth in total net profit before depreciation ranges from 15% to 20%, or (3) 3% of its outstanding shares if total net profit before depreciation grows by more than 20% YoY. These shares would be issued at a price equivalent to QNS’s book value as of YE2023 and have a three-year lock-up period.

Sugar outlook remains bright due to expected higher volume. QNS anticipates a 15-20% YoY increase in sugar production volume, from two million tons of sugarcane harvested in the 2023/24 season driven by a 16% YoY growth in the plantation yield to 77.5 tons/ha. Due to the depreciation of the VND/USD, the company decided not to import raw sugar for this season. Additionally, QNS has started retailing sugar and aims to increase retail sales to 15-20K tons in 2024 (around 10% of total sugar volume). Regarding future expansion plans, according to management, the An Khe sugarcane field area can be expanded to 40K ha, with QNS supporting local farmers to increase the plantation area by around 3K ha per year, up from 30K ha in the current season. Consequently, the company would potentially consider raising the production capacity of the An Khe factory to 20K tons/day in the 2024/25 season, up from the current 18K tons/day. QNS is also conducting feasibility studies for a potential investment in an ethanol factory utilizing sugar molasses as input material, with an estimated capex of VND1.2tn-VND1.5tn (USD48mn-USD60mn).

Management expects soy milk revenue to grow 9-10% YoY in 2024 mainly due to the recovery of milk consumption industrywide and new product development. According to management, the demand for soy milk consumption in 2024 is forecasted to rebound gradually, with a growth target of 9-10% YoY, driven by the anticipated recovery in production output. QNS has strategically rolled out low-sugar/sugar-free products, coupled with innovation in increasing protein content in soybeans, to cater to the mass economy segment, which exhibits greater purchasing power than the broader mass market. Looking ahead to 2024, the company plans to unveil new nut milk products to increase the average ASP of the soy milk segment.

Powered by Froala Editor