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QNS - Efforts to ramp up sugar production as planned by year-end

Q1-FY25: A bumpy road for the sugar segment overshadowed strong growth in milk.
• QNS Q1-2025 results missed our expectation by 19%, with net sales of VND 2,351 bn (-10% YoY) and NPAT-MI of VND 392 bn (-26% YoY), mainly due to weak performance in the sugar segment with output volume fell 32.1% YoY and ASP dropped 3.9% YoY. Soft demand, rising competition from sugar smuggling, and a strong 2023–24 cane crop led to high inventories and disappointing results for most sugar mills.
• The key bright spot was soymilk, with volume growth of +10.1% YoY, driven by market share gains in the trending plant-based milk niche. However, this was not enough to offset the sharp decline in QNS's sugar segment overall performance.
FY25 Outlook: Sugar oversupply expected to ease toward year-end
• Tighter crackdown on sugar smuggling since May-2025 is expected to support a gradual recovery in QNS’s sugar output (+4–5% YoY), in line with its ambitious plan to expand cane acreage (+20.5% YoY). However, as domestic sugar demand has plateaued for years (+3–4% YoY) and rising competition both domestically and sabroad, sugar prices are expected to remain low in the medium term (VND 18,000–18,200/kg, -10–11% YoY). Meanwhile, high sugarcane procurement prices must be maintained under the protection scheme, weighing on revenue and profit growth in this segment.
• Market share gains in the plant-based milk segment will be a key growth driver to help QNS navigate a challenging year for sugar, with soymilk volume projected to rise 13.6% YoY.
• We forecast QNS’s Q2-2025 earnings to improve QoQ as sugar supply-demand dynamics gradually normalize, with net sales of VND 3,358 bn (+48.0% QoQ, +19.1% YoY) and NPAT-MI of VND 628bn (-9.1% QoQ, +60.3% YoY).
• For FY25 as a whole, we project net sales at VND 10,123 bn (-1.2% YoY), NPAT-MI at VND 2,190 bn (-7.8% YoY), and EPS of VND 5,958.
Outlook & Recommendation
As Vinasoy’s market share approaches saturation (>85%) in the maturing plant-based milk sector (growing at 3–8% YoY), QNS is shifting its growth strategy toward expanding its sugarcane cultivation. The company aims to gain significant distribution share from small-scale producers and smuggled sugar, which is expected to come under tighter control.
We value QNS using a blended approach of short-term SoTP and long-term DCF (weighting 60:40) to reflect near-term sugar price volatility. Our 12-month target price is VND 52,600/share, implying a 2025F P/E of 13.9x. Based on the closing price as of 25/06/2025, we recommend ACCUMULATE.
We also highlight QNS’s strong dividend-paying capacity. The company typically pays out over 55% of annual net profit as cash dividends, implying a yield of 6.5–11.0%/year—well above deposit rates of 4.0–5.0%/year. Overall, QNS suits investors seeking stable dividend income with a medium-term yield of over 6.0%/year.