World sugar price reached the highest level in 11 years, a sugar cane stock “breaks the top” in history

After a series of 10 consecutive gaining sessions, the Vietnamese stock market recorded alternating ups and downs right in the early sessions of April. Many stocks were affected and turned back to plummet, but opportunities opened up again with stocks that have a good foundation and benefit from positive news. The SLS of Son La Sugar Joint Stock Company is an example of “silently” advancing to new heights.

This stock ended April 5, saw an increase of 1.27% to 160,000 VND/share. This is the record high price of SLS since listing, the old record was set in September 2021.

At the same time, the figure of VND 160,000 is enough to help SLS be in the top “most expensive” stock on the stock exchange at the moment. The stock surpassed the peak, helping the market capitalization of Son La Sugar to close to 1,570 billion dong.

Sugar prices remain high in 2023

One of the positive information flows helped this sugar industry “boom” thanks to the high price of sugar.

In fact, sugar cane is a strongly cyclical industry and its business results fluctuate according to the market price of sugar. World sugar prices have risen to an 11-year high since Q1 2012. Data updated on April 5, raw sugar prices are trading at 22,870 US cents/lb, up 20% since the beginning of the year. and increased by 55% in the last 2 years.

According to VNDirect Securities, global sugar prices for the first half of 2023 will be supported by lower-than-expected sugar production in India along with sugar production in Europe being negatively affected by adverse weather (drought). ). At the same time, Brazilian sugarcane producers are expected to continue to prioritize ethanol production over sugar due to the recent increase in gasoline prices. Therefore, the analysis team predicts that Vietnamese sugar prices will follow the trend of world sugar prices.

Besides, VNDirect expects that trade remedies will have a more pronounced effect than in 2022, leading to a decrease in the amount of imported sugar while the inventory of cheap imported sugar in 2022 is gradually decreasing. Therefore, VND believes that the price of imported sugar into Vietnam will continue to increase in 2023. However, imported sugar accounts for about 70% of total supply, smuggled sugar will still put competitive pressure on domestic sugar prices. .

On the other hand, the purchase price of sugarcane will be more stable than in 2022 to encourage people to expand the sugarcane growing area to ensure domestic supply. Companies using domestic sugarcane materials such as SLS will benefit greatly from the trend of increasing sugar prices.

Excellent business results, dividends up to 100%

According to the financial statement 2022-23 (from July 1 to December 31, 2022), net revenue of SLS reached VND 715 billion, 2.2 times higher than the same period last year. Deducting expenses, SLS net profit is 189 billion dong, 2.8 times higher than the same period last year. Earnings per share (EPS) reached VND 19,330. Thus, even though the revenue target was only 64% completed, SLS exceeded the full-year profit target by 2.5 times when it was only half way through.

In another aspect, what is attractive to shareholders is the fact that SLS is also known as a business with a tradition of paying high dividends on a regular basis.  

Since going public in 2012, this company has never “forgotten” to pay dividends in cash to shareholders. In recent years, the payout ratio is often above 50%. Most recently, SLS has spent nearly one hundred billion dong to pay dividends in 2021-22 in cash at the rate of up to 100% for shareholders.

Besides the tradition of paying high dividends, SLS is also noticed by investors when it regularly maintains high EPS of over 10,000 VND. One of the advantages that helps SLS achieve this result comes from being exempt from corporate income tax due to operating in areas with extremely difficult socio-economic conditions.

Duong Ngoc/Market life