More than 187 million shares of Quang Ngai Sugar Joint Stock Company began trading on the Unlisted Public Company Market (UPCoM) with code QNS on December 20.

The company’s share price jumped 40 per cent to close at VND112,000 (nearly US$5) at the end of the session, bringing the sugar producer’s market capitalisation to VND21 trillion.

QNS ended yesterday’s session at a price level that was lower than expected from HCM Securities Corp (HSC).

The company’s shares are valued at VND127,185 per share, an upside premium of 60 per cent over the reference price of VND80,000 per share, HSC said in a note, adding that QNS was initiated with a “buy” rating.

That evaluation came from the positive review of HSC on the prospective growth of Quang Ngai Sugar JSC as it owns the largest market share in soymilk (80 per cent) and is currently the third-largest sugar producer in Viet Nam.

QNS could be an alternative option besides two other large-cap companies in the food and beverage sector, which are dairy producer Vinamilk and brewer Sabeco.

QNS will have “plenty of scope for growth as the unbranded market shrinks with branded products taking over,” HSC said, noting that QNS is now dominant in the soymilk market – a branded market only.

HSC remained positive on the future growth of QNS and forecast that the sugar producer could record a yearly average growth rate of 11.1 per cent in net sales and 8.6 per cent in net profit in the next four years though QNS recorded lower performance in 2016 compared to the average number between 2011 and 2015.

QNS enjoyed strong business development from 2011 to 2015, according to HSC. Quang Ngai Sugar JSC recorded an average growth rate of 18.3 per cent in revenue and 20.8 per cent in net profit during this period.

Business performance slowed down in 2016 compared to years before as revenue from soymilk sales – spearhead product of QNS – was slower in 2016 due to “overall weak demand given rising competition from dairy products.”

In the first nine months of this year, Quang Ngai Sugar JSC received total VND5.3 trillion in revenue and VND807 billion in post-tax profit, a year-on-year decrease of 12 per cent and 19 per cent, respectively.

HSC also forecast that the third-largest sugar producer will move its listing to the HCM Stock Exchange from UPCoM in 12 to 18 months as “the authorities view UpCOM as a springboard to the main market” and “QNS is a large and very profitable company and will look a little out of place in UPCoM.” — VNS