- QNS announced H1 2021 results, in which revenue and NPAT-MI climbed 13% YoY and 19% YoY, respectively. These growth rates were led by the sugar business, which more than offset a 7% YoY decline in soymilk gross profit that was due to COVID-19’s negative impact on consumer demand and higher input costs.

- Given the current escalation of COVID-19 in Vietnam that could further dent domestic soymilk consumption, we see potential downside risk to our current forecasts, pending a fuller review.  

- In H1 2021, soymilk revenue edged up 2% YoY, showing improvement vs flat results in Q1 2021. However, H1 2021 soymilk sales were still 4% below H1 2019 levels (pre-COVID-19). Meanwhile, soymilk GPM compressed by 4.1 ppts YoY to 41.4% in H1 2021, which we mainly attribute to higher input costs such as sugar and soybeans. 

- In H1 2021, sugar gross profit reached VND144bn (USD6mn) vs VND3bn (USD123,000) in H1 2020 thanks to a surge in sales volume from a low H1 2020 base and firmer selling prices. We note that hot and dry weather hurt Vietnam’s sugarcane output in 2020, which in turn suppressed sugar production volume. Meanwhile, average monthly prices of refined standard sugar in Vietnam surged 27% YoY in H1 2021, per our estimate that is based on market research company Agromonitor’s data. Sugar prices rallied as Vietnam started to impose protective tariffs against imported sugar from Thailand in late February 2021.

- Gross profit from other businesses declined 6% YoY in H1 2021 amid COVID-19’s negative impact on confectionary and beer sales, which was partly cushioned by a higher electricity volume from QNS’s biomass power plant that primarily uses in-house sugarcane bagasse as input material.