The Ultimate Chemistry Stock: Riding the Wave of Success with Three Consecutive Price-Hike Sessions

In line with the recent upturn in the VN-Index, most stocks on the exchange have also witnessed positive trends. Among them, a notable performer in the chemicals sector is Southern Basic Chemicals Joint Stock Company (CSV).

The session on July 5 marked a three-day streak of ceiling-hitting increases, pushing CSV’s share price to 33,650 VND/share. As a result, the share price continued to hit an all-time high, doubling its value compared to the beginning of the year. For the first time since its listing, CSV’s market capitalization surpassed 3,700 billion VND.

This impressive rally followed Southern Basic Chemicals’ recent dividend payout. The company finalized the record date for shareholders to receive dividends for 2023 in cash and through the issuance of new shares on July 2. The dividend ratio was set at 25% (1 share receives 2,500 VND), and the payment was scheduled in two batches. In the first batch, shareholders received a 10% dividend, expected to be executed on July 16. The remaining dividend of 15% will be paid out at a later date, tentatively set for October 7.

Additionally, CSV also plans to issue over 66 million new shares at a ratio of 100:150 (for every 100 shares held, shareholders will receive 150 new shares). Following this issuance, CSV’s chartered capital will increase from 442 billion VND to 1,105 billion VND. The capital source for this initiative will come from surplus capital, other owner’s equity funds, and the development investment fund.

Beyond the dividend news, the momentum driving CSV’s strong rally can likely be attributed to market expectations of a bottoming-out and subsequent upturn in the global caustic soda market this year as demand recovers.

According to a recent assessment by the Vietnam Chemicals Group (Vinachem), the global caustic soda – chlorine market is anticipated to rebound in 2024 as the tight monetary policies in major economies near their conclusion and interest rates begin to cool down, leading to a revival in global industrial production. Vinachem expects that, as caustic soda and chlorine are fundamental and essential materials, their production and consumption sectors will continue to grow throughout the upward cycle.

Upon investigation, CSV operates in the field of chemical production, offering a range of products such as caustic soda (NaOH), sulfuric acid (H2SO4), hydrochloric acid (HCl), phosphoric acid (H3PO4), and PAC, among others. These products serve as vital inputs for numerous essential manufacturing and consumer industries, including fertilizers, paints and printing inks, pesticides, detergents, water treatment, and steel pickling.

2024 Profit Plan is the Lowest in Four Years

In terms of business performance, for the first quarter of 2024, CSV recorded a revenue of over 351 billion VND, a 10% decrease compared to the same period last year. However, the slower reduction in cost of goods sold resulted in a 26% decline in net profit, reaching nearly 47 billion VND.

For the full year 2024, CSV has set a business plan targeting a revenue of 1,640 billion VND, reflecting a modest increase of 3% over the previous year. However, the company’s projected pre-tax profit shows a 10% decrease compared to the 2023 performance, settling at 261 billion VND – the lowest profit level in the past four years.

The management of CSV acknowledges the challenges posed by declining selling prices for products like NaOH and HCI in the market, along with intense competition from low-cost imported products for H3PO4 and H2SO4. However, they also highlight certain favorable conditions, such as the stable supply of raw materials, a loyal customer base despite heightened competition, increased sales to TKV, and appropriate inventory levels in line with production requirements.

In 2023, CSV achieved a gross revenue of 1,588 billion VND, a 25% decrease from the previous year, while its pre-tax profit stood at 289 billion VND, representing respective declines of 25% and 43% compared to 2022. Nonetheless, the company surpassed its annual profit plan by 7%.