We maintain our MARKET PERFORM rating for QNS. In our view, QNS’s current 2022F/2023F P/E of 10.9x/10.4x looks full due to (1) its sizable net profit contributions (26% in 2022F) from the cyclical sugar business that experienced abnormally high margins in 2021 and (2) the company’s recent track record of allocating capital toward the low-margin and volatile sugar and biomass businesses.

We cut our target price (TP) by 5% due to the impact of reducing our aggregate 2022F-2024F NPAT-MI forecast of the key soy milk business, which is partially offset by edging up our sugar profit forecast thanks to newly implemented domestic sugar protection tariffs.

We forecast 2022F/2023F NPAT to grow -1%/5% mostly due to lower projected soy milk volume as we believe QNS’s new plant-based products are facing heightening competition from other players. Moreover, we project key material (i.e., soybeans) costs to remain high in H2 2022.