Thien Long Group Joint Stock Company (TLG) escaped the “price storm” thanks to pre-stocking of low-priced raw materials, bringing first-quarter profit up 35% over the same period in 2021.
Thien Long’s consolidated net revenue reached more than VND 794 billion, up 17% over the same period last year. The epidemic situation is under control, many schools and offices return to normal operation, which is considered the main reason for growth.
In addition, the low-cost raw material inventory leads to optimized production costs of the company. Cost of goods sold increased more slowly than revenue, helping to increase gross profit margin in the first quarter of the year slightly to more than 42.5%. However, the overall cost of raw materials still increased by nearly half over the same period.
In total, Thien Long has an after-tax profit of nearly VND 115 billion, an increase of 35% compared to the first quarter of 2021. This business has completed about a quarter of its revenue target and more than 40% of its profit target for the whole year.
This year, Thien Long ballpoint pen company promotes the strategy of increasing efficiency and reducing costs. The company will cut low efficiency product lines, focus on new value-added lines, improve existing products. In addition, the Thien Long Long Thanh factory expansion project will be built from this year, with a floor area of 8,000 m2. In the immediate future, some automatic lines imported from Korea have moved to the factory.
In 2021, TLG’s growth will be limited by negative impacts due to social distancing, reducing consumer demand for stationery products in addition to high production costs due to production policies “3 in place”.
This year, Bao Viet Securities (BVSC) forecasts that the normalization of studying and working will help office demand recover strongly. The “3 spot” production costs no longer affect the business. Therefore, BVSC believes that Thien Long’s profit plan of VND 280 billion is quite conservative. Moreover, the investment construction plan of Thien Long Long Thanh factory is assessed by this unit as promising for the growth engine of the business in the medium and long term.
BVSC also noted the risk of higher oil prices due to geopolitical tensions that could put pressure on Thien Long’s profit margin. However, with a strong recovery in demand, this unit believes that TLG has the ability to increase selling prices to compensate for the increase in raw material costs due to oil prices.
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