In spite of the declining profits of rubber producers listed on theVietnamese stock markets following a decline in world rubber prices,future prospects for the rubber industry remain bright.
Withglobal rubber supply increasing beyond demand, profits from Vietnameserubber exports in the first 10 months of 2014 plunged by 26 percentyear-on-year to 1.45 billion USD.
Phuoc Hoa Rubber (PHR),the Vietnamese rubber producer with the largest charter capital,achieved an average selling price of 42.2 million VND (1,900 USD) pertonne, or 2.6 million VND (122.6 USD) short of expectations. Its netprofit in the first three quarters of the year likewise dropped by 37percent to 143.5 billion VND (6.7 million USD).
As aresult, PHR plans to scale down its revenue target by 10.6 percent to1.36 trillion VND (64.1 million USD) and its profit target by 22.5percent to 207 billion VND (9.7 million USD).
Othercompanies such as Dong Phu (DPR), Hoa Binh (HRC), Tay Ninh (TRC) andThong Nhat (TNC) likewise experienced a reduction in profits by morethan 30 percent and had to scale down their targets by half.
However,companies in the rubber industry are still better off than those inother industries. For instance, they managed to pay high dividendsranging from 10 to 30 percent this year in spite of the difficulties.
Accordingto Nguyen Dinh Thanh, MB Securities Company head of brokerage, thecompanies' price-to-earning and price-to-book value ratios were lowerthan the market's average.
"This signals a long-termpotential for investment activities as the prices are cheap," Thanhsaid. He predicted that rubber prices would rebound becauseinternational buyers, especially those from China and India, wereexpected to buy more cars and tyres, and demand might recover followingthe reduction in the number of rubber plants.-VNA
Withglobal rubber supply increasing beyond demand, profits from Vietnameserubber exports in the first 10 months of 2014 plunged by 26 percentyear-on-year to 1.45 billion USD.
Phuoc Hoa Rubber (PHR),the Vietnamese rubber producer with the largest charter capital,achieved an average selling price of 42.2 million VND (1,900 USD) pertonne, or 2.6 million VND (122.6 USD) short of expectations. Its netprofit in the first three quarters of the year likewise dropped by 37percent to 143.5 billion VND (6.7 million USD).
As aresult, PHR plans to scale down its revenue target by 10.6 percent to1.36 trillion VND (64.1 million USD) and its profit target by 22.5percent to 207 billion VND (9.7 million USD).
Othercompanies such as Dong Phu (DPR), Hoa Binh (HRC), Tay Ninh (TRC) andThong Nhat (TNC) likewise experienced a reduction in profits by morethan 30 percent and had to scale down their targets by half.
However,companies in the rubber industry are still better off than those inother industries. For instance, they managed to pay high dividendsranging from 10 to 30 percent this year in spite of the difficulties.
Accordingto Nguyen Dinh Thanh, MB Securities Company head of brokerage, thecompanies' price-to-earning and price-to-book value ratios were lowerthan the market's average.
"This signals a long-termpotential for investment activities as the prices are cheap," Thanhsaid. He predicted that rubber prices would rebound becauseinternational buyers, especially those from China and India, wereexpected to buy more cars and tyres, and demand might recover followingthe reduction in the number of rubber plants.-VNA
