At the 2021 Annual General Meeting of Shareholders, the leader of Century Fiber said that the profit plan for 2021 is completely grounded, the 72% growth rate of this year due to the decline in profit in 2020 due to the COVID-19 epidemic. In addition, the company plans to start a factory with a total investment of 120 million USD this year.
Target profit 248 billion in 2021
2021 Annual General Meeting of Shareholders has approved the business plan for 2021 of Century Spinning Joint Stock Company (Ticker: STK) with the target of revenue of 2,358 billion VND, profit after tax of 248 billion VND; increasing 34% and 72% respectively compared to implementation in 2020. Shareholders also agreed to pay a cash dividend of 15% for 2020, equivalent to the amount of 103 billion VND.
According to the Board of Directors, the above plan is based on assumptions of the growth rate of recycled yarn, selling price, raw material price in the fourth quarter of 2020, production costs, labor costs and financial expenses.
“The 2021 profit plan is completely grounded because the profit in 2019 has reached 214 billion VND. The 72% growth rate in 2021 is due to the decline in profit in 2020 due to the COVID-19 epidemic. The plan will be achieved by taking into account the factors of market demand, the ability of the company and the cost factors, “said STK leaders.
Regarding the business results of the first quarter of 2021, STK said that the company has fulfilled 28.5% of the year’s profit plan and is confident to achieve the plan of the year 2021. However, how many% have to wait for to exceed the third quarter has a basis for determination.
According to SSI Research, “In the first quarter of 2020, STK recorded a high level of revenue due to the interruption of polyester fiber supply from China in the early days of COVID-19. This boosted STK’s consumption in the first quarter of this year despite the decrease in average selling prices.”.
SSI Research cited statistics from the Vietnam Cotton and Spinning Association (VCOSA), in the first quarter of this year, the world polyester yarn price increased by about 20-30% compared to the fourth quarter of 2020. However, adjustments are under consideration for the second quarter of 2021.
Therefore, STK expects average selling price to decrease gradually towards the end of the year. Overall, the company expects average selling prices to increase but only at a single digit in 2021.
Factory building 120 million USD
This congress also approved the construction of Unitex factory in Trang Bang, Tay Ninh and is scheduled to start this year.
Estimated total cost is $ 120 million, stage 1 is up to $ 75 million and phase 2 is $ 45 million. Interest rates are quite low at 2% in 2021 and will steadily increase to 3% in 2023 and 4% from 2024 onwards. STK also calculates a discounted VND / USD exchange rate assumed at 2% / year.
Phase 1 of the plant will run at full capacity in the fourth quarter of 2021 and officially run at full capacity in early 2023. Similarly, phase 2 will run at full capacity in the fourth quarter of 2024 and officially run at full capacity at the beginning of the year. 2025.
STK’s Board of Directors stated that UniFi has no factory in Vietnam and has no other manufacturing partner in Southeast Asia. In this partnership, it is UniFi’s interest to have extended arms because they tell their brand partners that Century is UniFi in Vietnam. They need to convince their brand partner that they are sourced in Vietnam.
“Thanks to this partnership, UniFi sells tens of millions of USD of raw materials each year to STK. The benefit of STK is to build a position in the global supply end of big brands.
Currently, STK output can control 80-90% of recycled yarn sales. UniFi contributes 10-20%, selling rate to UniFi depending on the season. And the input both sides are cooperating smoothly.
The mutual interest in this relationship is 1 + 1 = 3. Contract negotiation will be based on both sides having a need for fair and mutually beneficial cooperation. Losing this relationship will be a loss for both parties “, the representative of STK said.
Besides, the meeting approved the plan to offer more than 13.6 million shares to existing shareholders at the price of 10,000 dong / share, implementation rate of 20%.
All proceeds from the offering will invest in Unitex synthetic fiber factory. Depending on the actual amount of capital raised, the Board of Directors will develop a specific capital use plan.
In 2020, Century Fiber recorded revenue of approximately 1,766 billion VND and profit after tax reached 144 billion VND, down 20.8% and 32.7% respectively compared to 2019. According to enterprises’ explanation, The COVID-19 translation has had a heavy impact on revenue and profit in the second and third quarter of 2020.
Although the situation was stable in the fourth quarter and the business had higher profits than the quarters of the year and higher than the same period last year, but still could not compensate for the business results of the whole year.