AN PHAT PLASTIC (AAA): NEW FACTORIES SUPPORT MARKET EXPANSION - VCSC
New factories support sales volume growth. In 2016, as sales volume and revenue grew 24.4% and 32.8%, respectively, all of the company’s factories operated at full capacity, except factory No.6, which was in its trial period. In 2017, factory No.6 will be ready to go online while factory No.7 is expected to complete its trial period in Q1. Management expects factory No.6 and No.7 to work at 47% and 55% utilization, respectively, which will allow AAA to capture rising demand.
Profits should rise significantly despite slight margin contraction. We forecast 34.8% 2017 NPAT growth to VND197 billion (USD8 million). Lower fixed cost per unit and GPM gains from sales of more premium products will offset higher depreciation related to factory No. 6 to keep GPM flat. At the same time, high outstanding loans will generate more interest expense, but will be offset by a gain from a divestment of VBC shares. The company completely divested its VBC holdings in early 2017 for VND68.6 billion (USD3 million) to raise funds for potential investment in plastic manufacturing....
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