In a recent assessment of Vietnam’s sugar industry, SSI Securities Company took a positive view of sugar stocks to the end of the year.

According to the Vietnam Sugar Association (VSSA) and the General Department of Vietnam Customs, from January 1, 2020, when Vietnam officially abolished tariff quotas on sugar imports from ASEAN countries under the ASEAN Trade in Goods Agreements (ATIGA), sugar imported from Thailand has reached 1.2 million tons, up 330 per cent and accounting for about half of all sugar consumed in Vietnam, of 2.1-2.3 million tons a year.

However, after being investigated and taxed on aggregate demand - aggregate supply (AD - AS), Thai sugar has been indirectly exported to five ASEAN countries. According to the General Department of Vietnam Customs, the volume imported from five ASEAN countries reached 865,000 tons in 2021, a 280 per cent increase year-on-year, while the volume from Thailand fell 370,000 tons, down 70 per cent year-on-year.
Domestic sugar production reached 742,000 tons in the 2021-2022 crop, up 7.5 per cent against the previous crop and meeting about 35 per cent of domestic demand. The imposition of taxes of 47.6 per cent on sugar imported from Thailand and other ASEAN countries will improve the competitiveness of Vietnam’s sugar industry.

It is expected that the local sugar price will increase at a level equal to the price of imported sugar due to a shortage of domestic supply in the near future. The price could rise to VND19,000-20,000 ($0.81-0.85) per kilo by the end of the year, up 10 per cent compared to now.

On that basis, SSI recommends the Quang Ngai Sugar Joint Stock Company (QNS) stock, with a target price of VND59,800 ($2.55) per share (23 per cent upside potential and a return on investment (ROI) of 29 per cent).