Illustrative image (Source: VNA) Hanoi (VNS/VNA) - Fertiliser stocks aresurprising the market with many large names hitting the ceiling prices, mainlydue to the Ministry of Finance’s decision to make fertiliser subject to VAT atthe preferential rate of 5 percent.
Their stocks surprised investors, withPetroVietnam Ca Mau Fertiliser JSC (DCM) experiencing six consecutive gainingsessions in the last two weeks, finishing 11,300 VND per share on June 15.
During its annual share holders’ meeting, thecompany’s management board proposed to shareholders the company’s 2018 businessplan, with target revenue of 5.5 trillion VND and fertiliser consumption of751,000 tonnes.
It aims to earn 685 billion VND (30 million USD)and 650 billion VND in pre-tax profit and post-tax profit respectively, higherthan the previous year.
In 2018, the Vietnam Oil and Gas Group (PetroVietnam)plans to reduce its ownership at DCM from the current 75.56 percent to 51 percent.
Another stock seeing large growth isPetroVietnam Fertiliser & Chemicals Corporation (DPM). PetroVietnam willalso reduce its ownership at the company to 51 percent. Last week, DPM sharesincreased in four sessions in the total five trading sessions, finishing Fridayat 17,250 VND.
The Southern Fertiliser JSC (SFG) recorded 7.1 percentincrease last week, the figure for Lam Thao Fertilisers and Chemicals JSC (LAS)and Van Dien Fused Magnesium Phosphate Fertiliser JSC (VAF) were 5.2 percentand 2 percent, respectively.
Law No 71/2014/QH13, which took effect onJanuary 1, 2015, treats fertiliser as a VAT-free item. However, as VAT isexempted instead of a reduction to 0 percent, domestic fertiliser enterpriseshave not been entitled to VAT refunds for input materials and this has eateninto the competitiveness of their products. This had sent fertiliser pricesrising 5-8 percent.
Meanwhile, imported fertilisers are sold atlower prices than those of domestically-made products as the former enjoy a 5 percentVAT reduction, hitting sales and production of local fertiliser companies.
Fertiliser producers have petitioned lawmakersto add fertiliser to the list of products subject to value added tax (VAT) asif the law states that fertiliser products are subject to a 0 percent rate,enterprises can deduct tax payments for materials.
The Fertiliser Association of Vietnam (FAV), theVietnam Farmers’ Union (VNFU) and the Vietnam Chamber of Commerce and Industryhave also suggested imposing a VAT rate of 5 percent on fertiliser.
Responding the petition, the Ministry of Financerecently announced fertiliser will be added to the list of products subject toa value-added tax (VAT) rate of 5 percent instead of zero.
This was good news for producers as it allowsdomestic businesses to get refunds for the tax paid for inputs such asmaterials, electricity, water and packaging items.
Presenting opinions on the VAT imposed onfertiliser, the ministry also said that a proposed 0 percent VAT rate is not inline with international practices and the Government’s VAT tax system.
According to experts, another reason for themassive surge of fertiliser stocks was because they have experienced a longtime of deep dumping. In the long run, the fertiliser sector can hardly bringhigh profits for investors.
The demand for fertiliser tends to decline dueto the reduction of farm land. The scale of the fertiliser mills will notchange so the output does not increase much. As there is no expansion inproduction and business, the annual high dividend payment will eat into firms’profit, experts have said.-VNS/VNA
Their stocks surprised investors, withPetroVietnam Ca Mau Fertiliser JSC (DCM) experiencing six consecutive gainingsessions in the last two weeks, finishing 11,300 VND per share on June 15.
During its annual share holders’ meeting, thecompany’s management board proposed to shareholders the company’s 2018 businessplan, with target revenue of 5.5 trillion VND and fertiliser consumption of751,000 tonnes.
It aims to earn 685 billion VND (30 million USD)and 650 billion VND in pre-tax profit and post-tax profit respectively, higherthan the previous year.
In 2018, the Vietnam Oil and Gas Group (PetroVietnam)plans to reduce its ownership at DCM from the current 75.56 percent to 51 percent.
Another stock seeing large growth isPetroVietnam Fertiliser & Chemicals Corporation (DPM). PetroVietnam willalso reduce its ownership at the company to 51 percent. Last week, DPM sharesincreased in four sessions in the total five trading sessions, finishing Fridayat 17,250 VND.
The Southern Fertiliser JSC (SFG) recorded 7.1 percentincrease last week, the figure for Lam Thao Fertilisers and Chemicals JSC (LAS)and Van Dien Fused Magnesium Phosphate Fertiliser JSC (VAF) were 5.2 percentand 2 percent, respectively.
Law No 71/2014/QH13, which took effect onJanuary 1, 2015, treats fertiliser as a VAT-free item. However, as VAT isexempted instead of a reduction to 0 percent, domestic fertiliser enterpriseshave not been entitled to VAT refunds for input materials and this has eateninto the competitiveness of their products. This had sent fertiliser pricesrising 5-8 percent.
Meanwhile, imported fertilisers are sold atlower prices than those of domestically-made products as the former enjoy a 5 percentVAT reduction, hitting sales and production of local fertiliser companies.
Fertiliser producers have petitioned lawmakersto add fertiliser to the list of products subject to value added tax (VAT) asif the law states that fertiliser products are subject to a 0 percent rate,enterprises can deduct tax payments for materials.
The Fertiliser Association of Vietnam (FAV), theVietnam Farmers’ Union (VNFU) and the Vietnam Chamber of Commerce and Industryhave also suggested imposing a VAT rate of 5 percent on fertiliser.
Responding the petition, the Ministry of Financerecently announced fertiliser will be added to the list of products subject toa value-added tax (VAT) rate of 5 percent instead of zero.
This was good news for producers as it allowsdomestic businesses to get refunds for the tax paid for inputs such asmaterials, electricity, water and packaging items.
Presenting opinions on the VAT imposed onfertiliser, the ministry also said that a proposed 0 percent VAT rate is not inline with international practices and the Government’s VAT tax system.
According to experts, another reason for themassive surge of fertiliser stocks was because they have experienced a longtime of deep dumping. In the long run, the fertiliser sector can hardly bringhigh profits for investors.
The demand for fertiliser tends to decline dueto the reduction of farm land. The scale of the fertiliser mills will notchange so the output does not increase much. As there is no expansion inproduction and business, the annual high dividend payment will eat into firms’profit, experts have said.-VNS/VNA
VNA
