Plastics face demand decline, but divestment boosts share prices
Plastics face demand decline, but divestment boosts share prices
The plastics industry has been facing challenges due to weak construction activities, resulting in a decrease in demand for plastic products in the first quarter of 2024. But the industry's performance is expected to improve, especially in the second half of the year, as state capital divestment boosts share prices.
A factory owned by Bình Minh Plastic Joint Stock Company (BMP). The plastics industry has been facing challenges due to weak construction activities, resulting in a decrease in demand for plastic products in the first quarter of 2024. — Photo BMP |
Recently, the State Capital Investment Corporation (SCIC) announced its plan to divest state capital from Tiền Phong Plastic Joint Stock Company (NTP), leading to a surge in the company's stock prices. Over the past week, NTP shares have experienced a significant increase, from just under VNĐ43,000 per share to VNĐ62,600 per share.
Tiền Phong Plastic currently has a charter capital of nearly VNĐ1.3 trillion, with SCIC owning 37.1 per cent of the shares. Other major shareholders include Sekisui Chemical (15 per cent), Southern Tiền Phong Plastic (14.27 per cent), and Chairman of the Board of Directors, Đặng Quốc Dũng (6.87 per cent). Investors anticipate that Sekisui Chemical, a Japanese shareholder, will acquire the shares divested by SCIC and become the controlling shareholder.
Sekisui Chemical, Japan's largest manufacturer of plastic construction materials, has been a major shareholder of Tiền Phong Plastic since 2017. The two companies have a history of collaboration, with Tiền Phong Plastic acting as a distribution channel for Sekisui Chemical's products. In return, Tiền Phong Plastic received technology transfers, molds and equipment to produce and sell products under the Sekisui brand. This partnership has been beneficial for both companies and has contributed to their growth.
Despite a decline in business results in the first quarter of 2024, the expectations surrounding the state capital divestment have driven an increase in NTP shares. Tiền Phong Plastic recorded a revenue of over VNĐ948 billion and a profit after tax of VNĐ109 billion in the first quarter, reflecting a decrease of 27 per cent and 7.6 per cent respectively compared to the same period in 2023.
Looking ahead, Tiền Phong Plastic aims to achieve a revenue of VNĐ5.4 trillion, representing a 4.3 per cent increase, and a pre-tax profit of VNĐ555 billion, a decrease of 15.7 per cent compared to 2023. FPT Securities Company (FPTS) predicts that Tiền Phong Plastic's revenue for this year may reach VNĐ5.25 trillion, a 1.4 per cent increase, with an after-tax profit of VNĐ542.7 trillion, a 3 per cent decrease compared to 2023. The housing construction segment's prospects may be constrained by difficulties from residential real estate customers.
Among the 28 plastic businesses that have announced their first-quarter results for 2024, 16 companies reported increased profits compared to the same period last year. Meanwhile, two companies moved from loss to profit, three companies reduced losses, six companies experienced decreased profits, and one company changed from profit to loss. The leading enterprises in the industry, including Bình Minh Plastic (BMP), Tiền Phong Plastic (NTP), An Phát Bioplastics (AAA), Hà Nội Plastics (NHH) and Tân Tiến Plastic (TTP), account for nearly 54 per cent of total revenue and 89 per cent of total net profit.
Bình Minh Plastic Joint Stock Company (BMP) achieved a revenue of VNĐ1 trillion in the first quarter of 2024, a 30.5 per cent decrease, with a profit after tax of VNĐ190 billion, down 32.5 per cent compared to the same period in 2023. However, business results in the second half of the year are expected to improve as the real estate market gradually recovers, leading to increased demand for plastic products.
Bình Minh Plastics aims to achieve a revenue of more than VNĐ5.5 trillion in 2024, nearly a 6 per cent increase, with a profit after tax of VNĐ1 trillion, similar to the previous year's performance. SSI Research suggests that while the business results for the second quarter may improve compared to the first quarter, they are still expected to be lower than the same period last year. The consumption output is projected to recover in the second half of 2024.
For the entire year of 2024, SSI Research forecasts that Bình Minh Plastics will achieve a revenue of VNĐ5.18 trillion, a 1 per cent increase, with a profit after tax of VNĐ915 billion, a 12 per cent decrease compared to 2023. The estimated sales volume is 91,000 tonnes, a 5 per cent increase, but the average selling price is expected to decrease by 4 per cent. By 2025, revenue and net profit could reach VNĐ5.5 trillion and VNĐ1 trillion, respectively.
Despite the challenges faced by the industry, BMP stock price has shown growth, increasing nearly 9 per cent in the past month and more than 63 per cent in the past year.
Overall, while the plastics industry has experienced some setbacks in the first quarter of 2024, there is optimism for a gradual recovery, particularly later this year.
