Reduced profit margin
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VNDIRECT Securities Joint Stock Company (VNDIRECT) estimates that the total revenue of the first quarter of 2022 of listed wood and wood products companies increased by 10.2% compared to the same period last year thanks to the recovery from manufacturers. wood production in the South.

After the end of the social distancing period, most of the southern wood companies returned to work at 90% capacity in the first quarter of 2022, while in the second half of 2021 it was only 60-65% capacity. .

The group of export wood enterprises achieved better business results in the first quarter of 2022. Specifically, Truong Thanh Wood Industry Group Joint Stock Company (stock code: TTF) and Phu Tai Joint Stock Company (stock code: PTB) had very impressive business results in the first quarter of 2022, mainly in the first quarter of 2022. thanks to strong demand from US customers and maintaining high inventories in the fourth quarter of 2021.

Accordingly, in the first quarter of 2021, the wood revenue of Truong Thanh Wood Industry Group Joint Stock Company and Phu Tai Joint Stock Company reached VND 952 billion and VND 3112 billion, respectively, up 18% and 71% over the same period. period last year.

Revenue and net profit in the first quarter of 2022 of An Cuong Wood Joint Stock Company (stock code: ACG) increased by 8.8% and 18.8% respectively over the same period in 2021, thanks to the boost in revenue. export and cut selling costs.

Meanwhile, domestic wood producers such as Vietnam Forestry Corporation – JSC (stock code: VIF) and MDF VRG Quang Tri Wood Joint Stock Company (stock code: MDF) recorded an increase. negative growth, due to high input materials and increased competitive pressure from the wood plank segment as other businesses continuously expand their capacity in the period 2021-2022.

There is a common point for wood industry businesses that whether revenue increases or decreases, the gross profit margin of most wood and furniture companies will decrease in the first quarter of 2022 due to increased input materials and logistics costs. High.

Specifically, in the first quarter of 2022, the gross profit margin of the wood segment of Phu Tai Joint Stock Company decreased by 1.4 percentage points compared to the same period in 2021, to 21.3% because of the price of imported sawn pine and round pine. Exports increased by 52% and 38% respectively over the same period last year. The increase in wood prices is due to the impact of the Russia-Ukraine conflict and high logistics costs.

The gross profit margin of VRG Quang Tri MDF Wood Joint Stock Company also decreased by 6.2 percentage points in the first quarter of 2022, due to a 20% increase in the price of input rubber wood since January 15, 2022.

Demand is high, but costs are soaring

According to VNDIRECT Securities Joint Stock Company, the global demand for wood remains high, but costs have also increased sharply, putting pressure on gross profit margin.

Market research and consulting firm Grand View Research forecasts that the US wooden furniture market value will grow by about 7.9% in the five years from 2022 to 2027, driven by significant growth in single-family homes. Home loan and home loan in the US is at the highest level since 2018, home loan contracts continued to increase 8% year-on-year in April 2022.

Analysts expect that high demand for housing in the US will drive the purchase of wooden furniture products in 2022-2023.

The timber industry is also expected to benefit from China’s current capacity reduction. While countries around the world eased their disease control policies, China continued to pursue the “Zero COVID” policy with prolonged blockade in many areas such as Jiangsu, Jilin, Guangdong and Shanghai. Sea; in which, 3 of the 10 largest wood manufacturers in China have had to close factories in Shanghai and Jiangsu due to the impact of COVID-19

Experts believe that China’s implementation of the “Zero COVID” policy will promote the shift of orders to Vietnam. Currently, China is still Vietnam’s main competitor in the US market for furniture, accounting for 22.5% of the value of US furniture imports in 2021.

VNDIRECT Securities expects that enterprises with a large proportion of wooden furniture exports to the US will have advantages such as Phu Tai Joint Stock Company, Truong Thanh Wood Industry Group Joint Stock Company and Manufacturing and Trading Joint Stock Company. Nam Hoa trade.

Besides the prospect of increasing exports, the domestic market may also recover thanks to the “warmth” from the residential real estate market.

VNDIRECT expects the real estate market to witness a supply recovery trend in 2022, as developers will focus on boosting sales to improve cash flow. This is reflected in the prospect of strong growth in sales of listed real estate companies in 2022.

This securities company also expects residential real estate in Ho Chi Minh City. Ho Chi Minh City and Hanoi will recover strongly in the two years 2022-2023. VNDIRECT forecasts the supply of new apartments in Ho Chi Minh City. Ho Chi Minh City will recover from 60-70% by 2022-2023 by new regulations to remove legal bottlenecks such as Decree 148/2020/ND-CP of the Government amending and supplementing a number of Decrees. detailing the implementation of the Land Law, along with the revised Construction Law 2020.

According to CBRE, the supply of new apartments in Ho Chi Minh City. Ho Chi Minh City in 2022 will recover 69.5% over the same period, to 22,000 units and up 55.7% over the same period, to 34,000 units in 2023; in which, the mid-end segment increased again, accounting for 30 – 50% of the total supply of apartments.

VNDIRETC believes that the suburban housing market in HCMC. Ho Chi Minh City such as Binh Chanh, Can Gio, Nha Be, Thu Duc will attract investment in 2022, thanks to the development of infrastructure in these areas.

This securities company also expects that in the two years 2022 – 2023, the supply of new apartments in Hanoi will increase from 40 to 50% over the same period to 25,600 units and 36,000 units, thanks to the stable contribution from projects big of Vinhomes.

According to CBRE, the market is expected to welcome new products from large urban areas such as Vinhomes Wonder Park, Vinhomes Co Loa and open sales in the next stages from urban areas such as EcoPark and Gamuda City. VNDIRECT believes that wood manufacturers with a solid customer base will benefit from the recovery of the real estate market.

According to statistics of the General Department of Forestry, the wood and furniture industry has 115 enterprises directly producing wood; including 53 FDI enterprises.

An Cuong Wood Joint Stock Company (stock code: ACG) is the largest manufacturer of engineered wood in the country with about 55% market share. Some other large enterprises include: AICA Group, New Land Trading Service Joint Stock Company (ALC Corporation) with the brand name of Casta kitchen cabinets and VRG Dongwha MDF Wood Joint Stock Company – the owner of the second largest MDF factory. in Viet Nam.

In addition, a number of other enterprises such as Minh Long Co., Ltd., Moc Phat Trading and Service Co., Ltd., and Thanh Thuy Co., Ltd. are small wood-producing enterprises and occupy a negligible market share.

In fact, although there are many advantages to revenue growth, the high price of raw materials puts pressure on the gross profit margin of enterprises in 2022. The fact that the Russian Government has issued a ban on exporting logs to Vietnam. European countries and the US have led to a shortage in the global supply of raw materials, leading to an increase in the price of raw materials.

According to the general financial site Trading Economics (USA), the price of American lumber increased by 25% year-on-year to March 2022, reaching $1,412 per board foot. The gross profit margin of most wood and furniture companies decreased in the first quarter of 2022 due to high input materials and post-logistics costs.

VNDIRECT Securities Joint Stock Company believes that the gross profit margin of wood and furniture companies in 2022 will be affected because the supply shortage will continue to push up the price of wood materials in 2022. In 2022, the gross profit margin of wood and furniture companies will continue to decrease by 0.4-0.6 percentage points.

In addition, the cost of transporting containers has increased from $1,500/40ft container (Shanghai-Los Angeles route) in July 2019 to nearly $8,852/40ft container on March 2022, a sixfold increase within 5 years.

Although transportation costs have shown signs of cooling down on April 2022, down 10% from the previous month, VNDIRECT still forecasts that logistics costs will remain high, approximately $7,000/40ft container in 2020. 2022 due to current high oil prices.

“High logistics costs may affect the gross profit margin of wood and furniture companies in 2022”, VNDIRECT stated.

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