Sugar stocks soar on sharp material price hike

Sugar stocks like SLS of Son La Sugar JSC, QNS of Quang Ngai Sugar JSC, and LSS of Lam Son Sugar JSC have increased by tens of percent since the beginning of April thanks to soaring sugar prices.

LSS increased by 18% to reach VND8,440 ($0.36) at Friday's close, QNS rose by 10% to VND42,900 ($1.83). Notably, SLS is still "anchored" at the historic peak of VND161,600 ($7) per share.

Son La Sugar is listed on the Ho Chi Minh Stock Exchange, while Quang Ngai Sugar is registered on the unlisted public company market UpCOM and Lam Son Sugar listed on the Hanoi Stock Exchange.

Quang Ngai Sugar achieved net revenue of VND8.26 trillion ($352.07 million) in 2022, up 12% year-on-year and after-tax profit of VND1.29 trillion ($54.85 million), up 2.6%.

Son La Sugar reported net revenue of VND869 billion ($37.06 million) and after-tax profit of VND187.6 billion ($8 million) in the fiscal year 2022 that ended on June 30, 2022, up 8% and 14% respectively.

Meanwhile, Lam Son Sugar posted a net revenue of nearly VND673 billion ($28.7 million) and after-tax profit of VND7.6 billion ($324,100), down 15% and 44% respectively.

Sugar is the raw material that has witnessed the biggest price fluctuations in recent times. Sugar prices have spiked to their highest levels in more than a decade as concerns about tight global supply weigh on global food security. World raw sugar prices recorded a "vertical" increase since the beginning of April, hitting $24.34 cents/lb on April 13 and also the highest level since Q1/2012.

According to leading Vietnamese broker VNDirect Securities, global sugar prices for the first half of 2023 will be supported by lower-than-expected sugar production output in India along with sugar production in Europe being negatively affected by adverse weather. 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.

In the sugar industry prospect report for Q1/2023, Vietcombank Securities (VCBS) said that the defensive measure has started to take effect as the total sugar import volume in 2022 decreased by 12.6% compared to the same period last year, with the main source of alternative imports being Australia and Indonesia.

VCBS said that the purchase price of sugarcane at factories in Vietnam recovered well to an average of VND1.05 - 1.1 million ($47) per ton due to scarcity of supply. This is a premise to motivate farmers to expand their material areas in the coming years.

Meanwhile, the Vietnam Sugarcane and Sugar Association (VSSA) has made a positive forecast for the country's sugar industry in the 2022-2023 crop year, with both sugarcane production area and output increasing compared to the previous crop year.

Thanks to the application of anti-circumvention measures, some cane sugar products imported from ASEAN countries have seen import volumes decrease markedly.