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QNS – Revising up earnings forecast backed by the preliminary 10M2023 results

• Q3 2023, net revenue and net profit were VND2,467 bn (-21.7% QoQ; +7.3% YoY) and VND506 bn (-28.9% QoQ; +59.9% YoY), respectively. The decrease QoQ of the revenue is due to lower selling volume of the sugar segment. Net profit grew by 60% YoY thanks to improved gross margin, driven by higher selling prices of sugar.
• Accumulated 10M2023, total revenue and net profit reached VND8,800 bn (+24% YoY) and VND1,495 bn (+74% YoY), respectively. The sales volume was higher than our expectations. Therefore, we revise up our expected selling volume of sugar for 2023/2024 period to 240,000/218,160 tons.
• 2023F/2024F sales are upgraded to VND10,806/10,975 bn (+30.8%/+1.6% YoY). The expected net profit was adjusted to VND2,019 bn (+57.2% YoY) for 2023 and VND2,026 bn (+0.4% YoY) for 2024 from the previous forecasted 2023/2024 net profit of VND1,960/1,886 bn. The equivalent new 2023F/2024F EPS is VND6,564/6,588 (+55.6%/+0.4% YoY).
• Combining the FCFE valuation (50%) and SOTP valuation models (50%), we raise our target price for QNS to VND54,000, equivalent to an implied 2023/2024 P/E of 8.2/8.2x. Adding a cash dividend of VND4,000, the 12-months expected return is +27.2% compared to the closing price on Nov 28th 2023, equivalent to a BUY recommendation.