QNS - Stellar earnings growth fueled by sugar profit surge in 2023 – Earnings Flash
  • 2024-01-29T00:00:00
  • Company Research
  • QNS announced 2023 results with revenue of VND10tn (USD414mn; +21% YoY) and NPAT-MI of VND2.2tn (USD90mn; +70% YoY), fulfilled 95% and 107% of our 2023F forecasts, respectively. In Q4 2023, revenue and NPAT-MI were VND2.3tn (USD94mn; +17% YoY) and VND654bn (USD27mn; 53% YoY), respectively. As 2023 earnings exceeded our forecasts, we see slight upside potential to our current projection, pending a fuller review.
  • Sugar profitability expanded in 2023 on both price and volume jump. According to QNS, sugar volume grew 73% YoY in 2023 on top of an increase in QNS’s average selling price of 18% YoY, in our estimate. The strong growth of the price of sugar and volume in 2023 was mainly attributable to the rising fears of a sugar shortage in both global and domestic markets amid severe El Niño weather in Asia. As a result, QNS’s sugar GPM expanded 10.9 ppts YoY in 2023.
  • Soy milk revenue decreased 7% YoY in 2023 as consumption remains weak. Soy milk selling volume in Vietnam dropped 9% YoY in 2023 and 16% YoY to 55 million liters in Q4 2023. This decrease was primarily driven by (1) a generally weak nutrition drink industry due to challenging economic conditions and (2) competition among Vietnamese milk producers in the plant-based milk market. In our estimate, COGS per soymilk unit increased 3% YoY in 2023 due to higher input material costs. Consequently, soy milk GPM decreased by 1.6 ppts YoY to 39.1% in 2023.
  • The notable surge in others' gross profit primarily came from the biomass power segment, witnessing a strong 50% YoY increase in revenue in 2023. This growth was fueled by an elevated input volume of sugarcane bagasse, supported by a robust performance in the sugar business.
  • QNS’s EBIT margin increased by 5.1 ppts YoY in 2023, which is backed by cost efficiency improvements in the sugar business as SG&A/sales decreased 1.4 ppts YoY. Non-operating profit, which is mainly income from bank deposits, doubled YoY in 2023 thanks to better interest deposit rates, which further bolstered net profit growth of 70% YoY.

QNS’s Q4 and 2023 results

VND bn

Q4 2022

Q4 2023

YoY

QoQ

2022

2023

YoY

2023 as % of Vietcap's 2023F

Revenue

1,944

2,274

17%

-8%

8,255

10,023

21%

95%

Soy milk

915

896

-2%

-21%

4,305

4,003

-7%

96%

Sugar

523

911

74%

0%

1,973

4,038

105%

93%

Others(1)

506

466

-8%

8%

1,978

1,982

0%

99%

Gross profit

586

904

54%

5%

2,459

3,357

37%

102%

Soy milk

336

303

-10%

-34%

1,752

1,563

-11%

93%

Sugar

135

346

156%

11%

375

1,209

222%

97%

Others(1)

115

255

123%

190%

332

585

76%

165%

Operating profit

413

603

46%

24%

1,359

2,159

59%

107%

Non-operating profits

85

132

56%

73%

147

293

100%

117%

PBT

498

735

47%

30%

1,505

2,452

63%

108%

NPAT-MI

429

654

53%

29%

1,287

2,189

70%

107%

 








 

GPM

30.2%

39.8%



29.8%

33.5%


 

 - Soy milk 

36.8%

33.8%



40.7%

39.1%


 

 - Sugar 

25.8%

38.0%



19.0%

29.9%


 

EBIT margin

21.3%

26.5%



16.5%

21.5%


 

NPM

22.1%

28.8%

 

 

15.6%

21.8%

 

 

Source: QNS, Vietcap forecast; (1) include beer, confectionary, mineral water, and biomass power plant.

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