Investment Recommendation

SBT_BUY_TP 27,640_Upside +21.8_Sugar industry benefits from anti-dumping tax_BSC_Vietnam company update

Date

26/03/2021
Language

Tiếng Việt
Number of Downloads

107

Detailed report

VALUATION

We recommend BUY SBT with a target price of VND 27,640, upside 21.8% compared to the price on March 24, 2021. BSC raised its target price due to improved business results thanks to (1) World sugar prices increased sharply in 1Q2021 +20-25% YoY; (2) Export of RE sugar to Europe and China increased sharply in Q4/2020 and Q1/2021; (3) Government anti-dumping and anti-subsidy taxes.

FORECAST OF BUSINESS RESULTS

We forecast SBT's FY2020/21 results will reach revenue and NPAT of VND15,482 billion (+20.1% YoY) and VND457 billion (+25% YoY) respectively, equivalent to fw EPS of VND712/share. – fw PE is 33.5x and fw PB is 1.9x.

INVESTMENT THESIS

SBT has the advantage in proactively sourcing input materials when it has a large raw material garden (a large area adjacent to high mechanization), along with owning GMC - an international commodity exchanger.
Sugar export surplus for China and EU markets.
Vietnam's sugar industry recovered thanks to anti-dumping and anti-subsidy taxes of the government.

RISKS

Fierce competition from cheap Thai sugar when the ATIFA agreement takes effect in early 2020.

COMPANY UPDATE

At the end of Q2 of FY2020/21, SBT achieved net revenue and profit after tax of VND 3,851 billion (+30% YoY) and VND 140 billion (+7.7 times YoY).
For the sugar segment, Q2 revenue reached VND3,748 billion (+34% YoY) thanks to sugar consumption reaching 338 thousand tons (+32% YoY) with the strategy (1) Focusing on boosting the domestic market share in the channel B2B and B2C consumer channels; (2) Expanding export markets in the EU by benefiting from EVFTA export tax incentives;