Source: stockbiz.vn
The outlook for production output in the 2023/2024 crop is expected to be positive thanks to the expansion of the domestic sugarcane raw material area in the context of a sharp increase in sugar prices.
Domestic sugar prices go against the world
Commenting on world sugar prices in 2024, FPTS Securities Company said that according to World Bank forecasts, world sugar prices in 2024 will decrease by 6% to 490 USD/ton due to concerns about tight supply. eased as global manufacturing output improved as the weather outlook became more positive.
The current El Nino state is forecast to last until mid-2024, after which the weather may change to a neutral state. Thus, in the second half of the 2023/2024 crop year, climate conditions are expected to be more favorable for sugarcane cultivation and harvesting, helping to increase global sugarcane output.
According to the November 2023 forecast of the International Sugar Organization (ISO), global sugar production in the 2023/2024 crop year will only have a slight deficit of approximately 0.3 million tons compared to consumption demand, a significant decrease. Compared to the deficit of 2.1 million tons in the August 2023 forecast.
In 2023, world sugar prices increased sharply and reached a 12-year peak in early November due to concerns about global sugar supply tightening due to the El Nino weather phenomenon (appearing from the beginning of the second quarter of 2023) causing drought and sugarcane crop loss in India and Thailand (ranked 2nd and 3rd respectively in sugar production and export in the world).
However, from the end of November until now, world sugar prices have been in a downward trend because of the prospect of production output in the 2023/2024 season of Brazil (the world’s largest sugar producer and exporter) reaching a record level. continent, an increase of 27.4% over the same period will offset the decline in output in India and Thailand, helping the world sugar supply and demand balance to be more balanced.
Regarding domestic sugar prices, FPTS said that from the beginning of 2023 until now, Vietnamese sugar prices increased nearly 10.6% over the same period following the increasing trend of world sugar prices and reached over 22,000 VND/kg since January. ten.
At the end of 2023 and the first half of the first quarter of 2024, Vietnam’s sugar price will continue to maintain its current high level (21,000 – 22,000 VND/kg), going against the downward trend of world sugar prices in the short term because: The inventory of most domestic sugar enterprises is low because the production output of the previous crop has been almost completely consumed and from December, new factories will enter the 2023/2024 season and domestic sugar consumption demand. usually increases at the end of the year to serve the production of confectionery and cakes for the holidays.
FPTS believes that, from the end of the first quarter of 2024, Vietnam’s sugar price is expected to begin to adjust and decrease slightly by approximately 3% over the same period in 2024, reaching an average of 19,900 VND/kg because: Sugar production Domestic production is abundant as businesses enter the new crushing season from December 2023 with positive production output prospects and falling world sugar prices.
“The decrease in world sugar prices in 2024 will affect the trend of domestic sugar prices because currently the domestic supply only meets 35-40% of consumption demand, the rest depends on imported sugar,” FPTS evaluates.
High consumption output
The outlook for production output in the 2023/2024 crop (starting from December 2023) is expected to be positive thanks to the expansion of the domestic sugarcane raw material area in the context of a sharp increase in sugar prices.
The Vietnam Sugar Association (VSSA) forecasts that sugarcane output processed in the 2023/2024 crop year will reach 10.6 million tons, up 9% over the same period and produce more than 1 million tons of finished sugar. , up 10% over the same period – the highest output level since the 2019/2020 crop year until now.
Evaluating the business results of listed sugar companies, this Securities Company forecasts that business results will decrease slightly, but remain at a high level. Accordingly, revenue of sugar businesses in the 2023/2024F crop year is estimated to reach 38,159 billion VND, down nearly 1.6% over the same period due to: Average selling price reaching approximately 16,648,000 VND/ton, down nearly 3. 2% over the same period and sugar consumption reached 1,755,000 tons, equivalent to the high base level of the 2022/2023 crop year.
FPTS believes that the average selling price of listed sugar companies in the 2023/2024F crop year is expected to have the same downward trend as domestic sugar prices when the outlook for domestic production output is positive and is affected by sugar prices. world decreased.
Meanwhile, the consumption output of businesses in the 2023/2024F crop year is forecast to be equivalent to the high level of the 2022/2023 crop year (consumption output increased by 27% over the same period thanks to benefits from prevention measures). commercial defense.
This unit stated that the sugar industry’s after-tax profit is estimated at VND 2,991 billion, down 1.5% over the same period in the 2023/2024F crop year, a decrease due to a decrease in industry-wide revenue. Projected after-tax profit margin is equivalent to the 2022/2023 crop year even though selling prices decrease thanks to the assumption of reduced interest expense pressure and QNS’s soy milk segment profits improve thanks to cooling input prices.
“Despite the decline, the 2023/2024F business results are still very positive compared to the sugar industry’s business results in the past 5 seasons thanks to sugar prices remaining anchored at a high level. Revenue and profit after tax of the sugar industry in the 2023/2024F crop year are 39% and 40% higher, respectively, than the average level for the period 2018/2019 – 2022/2023″, FPTS commented.
