Sugar firms foresee sweet prospects
Sugar firms foresee sweet prospects
Sugar businesses expect a strong rebound in 2023 amid a spike in price and safeguard measures.
According to Thanh Cong Securities JSC, the price of sugar in the global market reached 21.7 cents/lb on February 1, rebooting to the peak level in 2017 after falling to a bottom 9 cents/lb in April 2020.
According to the United Nations Food and Agriculture Organization (FAO), during January-October 2022 the sugar price averaged 18.5 cents/lb.
Current sugar production can only meet about 35 per cent of domestic market demands
A spike in the sugar price in the first month of 2023 signifies an upbeat prospect for sugar firms.
The leader at Lam Son Sugar JSC (LSS) noted that despite facing mounting hardships in 2022, the company made great strides and posted encouraging results.
Along with this, LSS counted $108.6 million in revenue and $34.7 million in profit, higher compared to the previous years when the company reaped $1.91 million and $956,520 in profit in 2021 and 2022, respectively.
Its production and business activities remained stable. Notably, last year LSS focused on expanding material growing areas as well as output markets for high-tech agricultural products and drinks.
This year, LSS is set to reach $130.4 million in revenue for the 2022-2023 season, increasing to $217.3 million by 2025, simultaneously investing strongly in research and development (R&D) and deep processing to create products with high added value.
The company has recently injected nearly $21.7 million into building and put into operation five new plants.
Meanwhile, Thanh Thanh Cong-Bien Hoa Sugar JSC (SBT) aims to expand its material areas in Australia during 2021-2025 period to 20,000ha.
Last August, SBT developed 1,244ha material growing areas in Australia, striving to expand to 5,000ha in the 2022-2023 season.
Mirae Asset Securities predicted that SBT’s revenue in the 2022-2023 season could reach $879.5 million, and its post-tax profit $46.8 million, up 10 per cent and 29 per cent compared to the previous season.
There are three factors attributable to SBT’s rosy growth, according to Mirae Asset’s experts.
First, the company’s profit margin is expected to swell from 12.5 per cent to 13 per cent thanks to higher price. Second, the revenue from sugar production is expected to inch up 12 per cent. Third, bright prospects in exports to China following China’s recent re-opening.
The US Department of Agriculture has forecast that China will import 4.4 million tonnes of sugar in the 2022-2023 season. This entails export opportunities to Vietnamese sugar firms, including SBT.
At Son La Sugar JSC, in the second quarter lasting from October 1 to December 31, 2022, the company counted $4.69 million in post-tax profit, up 213 per cent on-year.
The company has attributed its sharp profit growth during the period to rising sales revenue and accrued profit against dwindling financial and business management costs compared to one year ago.
In the 2021-2022 season, the company’s cumulative revenue surpassed $14.2 million and post-tax profit $2.95 million.
VNDIRECT Securities assumes that Vietnam’s sugar industry will regain its status with a growth rebound in 2023 in the face of a sugar price rally and the application of measures to combat trade remedy evasions.
Accordingly, after investigation last August, Vietnam officially imposed an anti-dumping tariff at 42.99 per cent and anti-subsidy tariff at 4.65 per cent on sugar products imported from Thailand and countries with sugar materials originating from Thailand.
The tariffs run from August 9, 2022 to June 15, 2026.
