According to Thanh Cong Securities Company, the world sugar price on February 1, 2023 reached 21.7 cents/lb, recovering to 2017’s peak (after bottoming at 9 cents/lb in April, 2020).
According to the Food and Agriculture Organization of the United Nations (FAO), from January to October 2022, the average price of sugar was 18.5 cents/lb. The sharp increase in sugar prices in the first month of 2023 has brought a positive outlook for sugar businesses.
Previously, FAO predicted that by 2029, the average sugar price would reach 21.3 cents/lb, but the price in January 2023 exceeded this figure.
The US Department of Agriculture expects global sugar production in the 2022-2023 crop year to increase by 0.9% to 183 million tons, due to favorable weather in both Brazil and Thailand.
In Vietnam, domestic sugar production has not met demand. The Vietnam Sugarcane and Sugar Association (VSSA) said that in the 2021-2022 year crop, the whole industry pressed 7.5 million tons of sugarcane, sugar production output reached 742 thousand tons, an increase of more than 11.6% and 7.5% respectively compared to the 2020-2021 year crop, but only met 35% of the domestic market demand (2 million tons/year).
That demand exceeds supply occurred many years ago, but the sugar industry often faced difficulties when both official and smuggled sugar increased. In particular, from 2020, Vietnam began to implement its commitments in the ASEAN Trade in Goods Agreement for sugar cane products, the import tax rate was reduced to 5%.
Meanwhile, some countries in ASEAN have subsidized the domestic sugar industry in various ways, in order to boost exports, leading to an unfair competition. As a result, the price of sugar dropped, the area of sugarcane cultivation was significantly narrowed because the income from this crop did not guarantee the lives of farmers, many sugar factories in Vietnam had to stop operating.
After the investigation process, in August 2022, Vietnam officially applied anti-dumping tax of 42.99% and anti-subsidy tax of 4.65% for sugar products imported from Thailand and countries with sugar materials originating from Thailand, applied from August 9, 2022 to June 15, 2026.
As a result, the amount of imported sugar decreased significantly. According to VNDIRECT Securities Company, in 2023, Vietnam's sugar industry will regain its position with the recovery of sugar prices and measures to prevent trade remedies.
Thanh Thanh Cong Bien Hoa Joint Stock Company (stock code: SBT) is currently the largest sugarcane enterprise with more than 46% domestic market share. The company has a raw material area of 63,827 hectares in Vietnam, Laos, Cambodia, with total production capacity of 4,250 tons of sugar/day.
For many years, TTC Sugar has always been the leader in both revenue and after-tax profit even when the sugar industry faces difficulties.
By the end of the second quarter (from October 1 to December 31, 2022) of the fiscal year (2022-2023), Thanh Thanh Cong Bien Hoa Joint Stock Company had produced more than 683 thousand tons of sugar, recorded accumulated net revenue of VND 12,281 billion, up 32% over the same period, completing 72% of the year plan.
Sales volume recorded a significant growth over the same period. In particular, export grew significantly when sales volume increased by more than 70%; B2B channel increased by 26% compared to the same period last year. This is a positive sign that sugar consumption demand has improved significantly during the economic recovery period.
Profit before tax in the first 6 months of the year reached more than VND 432 billion, completing 51% of the year plan; profit after tax reached VND 384 billion. The company sets a revenue target of VND 17,017 billion, pre-tax profit of VND 850 billion, dividend of 4-6% in the fiscal year 2022 - 2023.
At the end of the second quarter of the year (2022-2023), sugar still played a key role in the revenue structure when the sugar product lines recorded VND 11,400 billion, accounting for nearly 93% of revenue, an increase of more than 28.5% over the same period.
In addition to positive business results, Thanh Thanh Cong Bien Hoa’s scale was also expanded with total assets as of December 31, 2022 reaching VND 29,202 billion (~ USD 1.3 billion), a slight increase of 5% compared to the beginning of the fiscal year.
The second largest sugar company in Vietnam is Quang Ngai Sugar Joint Stock Company. This is the leading enterprise in the production of sugar and sugar products in the Vietnam.
QNS said that in 2022, the situation of the COVID-19 epidemic in the world and Vietnam was under control, and Vietnam's economy gradually recovered and developed, which has had a positive impact on the company's production and business activities. Some products had increased sales volume, sales and profit over the same period.
At the same time, the company focuses on developing raw material areas to increase productivity and quality of sugarcane.
In 2022, QNS recorded net revenue of nearly VND 8,260 billion, up 13% and net profit of VND 1,285 billion, up 2% compared to 2021.
For 2023, the company sets a target of consolidated revenue of VND 8,400 billion and profit after tax of VND 1,008 billion. Compared to the results of 2022, the revenue plan in 2023 is slightly increased by 2% but the profit plan is expected to decrease by 22%.
Total assets of QNS as of December 31, 2022 were more than VND 10,261 billion, up 4% compared to the beginning of the year. The term deposit at banks was nearly VND 4.3 trillion, up 10% - this is also the reason for the sharp increase in financial revenue.
In addition to the two enterprises mentioned above, the list of the 5 largest sugar companies in Vietnam also includes Bibica Corporation, Son La Sugar JSC, and Lam Son Sugar Joint Stock Corporation.
Alice Hoang Thao – VietnamCredit
