- We upgrade our rating for QNS from MARKET PERFORM to OUTPERFORM despite cutting our target price (TP) by 12% as the company’s share price has fallen 22% over the last three months. 

- Our lower TP is due to (1) our 12% cut in aggregate 2022F-2025F NPAT-MI that is mainly driven by our downward revision for the sugar and soy milk businesses and (2) the impact of a 15% decrease in our target P/E multiples across segments following a 100-bp increase in our in-house cost of equity assumption. 

- We forecast NPAT to decline by 11% in 2022F and remain flat in 2023F, which is mainly due to lower projected soy milk volume as we see heightening competition in the plant-based nutrition segment. Moreover, we expect a squeeze in sugar net profit margin due to rising sugarcane input costs in 2022 and softer ASPs in 2023. 

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