SSI Research Forecasts Positive Earnings for Hoa Phat

DNHN - SSI Research estimates that HPG’s net profit in 2024 will reach VND11.2 trillion, up 64% year-on-year, thanks to the recovery in both consumption output and steel prices.

In the fourth quarter of 2023, Hoa Phat Group (HPG) recorded impressive results with net revenue and net profit reaching VND34.4 trillion (up 33% year-on-year) and VND2.97 trillion (up 48% quarter-on-quarter), respectively, marking the best business results in the last six quarters.

The strong recovery in profit was mainly driven by increased consumption output, although steel prices only increased slightly. HPG’s total output of construction steel, HRC and steel billets all increased significantly, reaching 2.1 million tonnes, equivalent to 99% of operating capacity and the third-highest output level in history.

In particular, the construction steel segment has recovered impressively, with output increasing by 48% year-on-year and 32% quarter-on-quarter. This was supported by the recovery in domestic market demand and improved exports, along with the company’s increased market share. The HRC segment also recorded record consumption output at 804,000 tonnes, up 36% year-on-year and 5% quarter-on-quarter.

Although full-year 2023 profit decreased year-on-year, HPG still completed 79% of the company’s revenue plan and 85% of its net profit plan.

With the outlook from 2024 onwards, SSI Research expects steel prices to increase slightly due to pressure from a slight decrease in global supply and the recovery of the Chinese real estate market. However, steel prices are unlikely to increase sharply due to the delay in the recovery of this market, as well as pressure from steel prices and profit margins compared to rising raw material costs, which could drive production activities in China to return.

SSI Research estimates that HPG’s net profit in 2024 will reach VND11.2 trillion, up 64% year-on-year, thanks to the recovery in both consumption output and steel prices. The company expects construction steel and HRC output to continue to increase, reaching 4.5 million tonnes and 3 million tonnes in 2024, respectively.

In the long term, SSI Research expects HPG’s profit to continue to grow by an average of over 30% per year in the period 2025 to 2027, thanks to the Dung Quat 2 project. This is expected to help the company double its HRC consumption output, from 2.8 million tonnes in 2023 to 7.5 million tonnes in 2027.

PV