|
Profit-making sugar maker carries high-risk investments
Leading listed sugar producer Lasuco carries a profitable outlook from its core business, but has incurred a high level of risk from its financial investments.
The Lam Son Sugar Joint Stock Corp. (LSS), also known as Lasuco, has poured capital exceeding its equity into financial investments that can make or lose big money.
As of June 30, the sugar producer’s total financial investments accounted for 52 percent of its share capital and 107 percent of its registered capital. Short-term investments, mainly in the stock market, surged 178 percent from the end of last year.
The investments in the financial sector, which are not Lasuco’s core business, can fetch big returns but carry a high level of risk.
The company’s price-on-earning (P/E) ratio, in contract, showed the company has profitable prospects. The Sacombank Securities Co. estimated in a report that Lasuco’s P/E at the end of last month accounted to 5.7, much lower than the market’s average of 13- 14.
Therefore, share prices of the sugarcane maker will likely surge in the coming time.
However, recent transactions by inside shareholders tell some surprising stories, with many registering to sell their holdings or cancel their buying register earlier.
“Investors should be cautious about LSS’s recent rises,” stock newswire Vietstock said in a report on its website. The shares Wednesday rose for the fifth consecutive trading day to VND36,000 (US$2.10) over speculation about earnings of sugar producers during the Mid-Autumn Festival.
The most popular national holiday after Tet (Lunar New Year), the Tet Trung thu (Mid-Autumn Festival), as the festival is known, sees a large number of mooncakes distributed among family and friends. The celebrations take place on the 15th day of the eighth month in the Chinese calendar, which falls on October 3 this year.
“Confectionery, cake and beverage products will be strongly consumed during this event,” Bloomberg quoted Le Ba Hoang Quang, head of research at Sacombank Securities, Vietnam’s third-biggest brokerage, as saying.
Healthy earnings
Lasuco’s second quarter revenues rose more than 20 percent year-on-year to VND252.8 billion ($14.78 million), according to a report of the Sacombank Securities Co. released last month.
First-half profits accounted to VND103 billion ($6.02 million), exceeding this year’s target of VND95 billion.
However, the brokerage estimated in the report that revenues will drop in the July quarter due to low inventory at the end of the previous quarter. Lasuco expects to sell around 15,000 tons of sugar in the quarter ending in September for VND180 billion ($10.52 million).
The firm estimates to make VND2,500-3,000 per kilogram from the sales for third-quarter gross profits of VND37-45 billion ($2.16-2.63 million), 20.5-25 percent margin.
The Ho Chi Minh City-based brokerage also estimates Lasuco’s last-quarter revenues at around VND205 billion ($11.98 million). As sugarcane prices are not set to rise sharply because of this year’s excess production, the gross profit percentage is estimated at 20 percent.
Tai Viet
thanhnien
|
