"Steel King" Tran Dinh Long sells chicken eggs, and air conditioners, and has a mountain of cash in his possession.

DNHN - Despite a decline in steel production, Hoa Phat maintained a profitable business in the agricultural and electrical appliances sectors. Hoa Phat deposited nearly 23 trillion dongs in short-term bank accounts, in addition to more than 13 trillion dong

Profit increased by 3.78 times compared to the first quarter, but decreased by 64% during the same time frame.

 Hoa Phat Group Joint Stock Company (stock symbol: HPG) has just reported a 21% decline in net revenue for the second quarter compared to the same period last year, with net revenue reaching VND 29,496 billion. The profit after tax fell by 64%, to 1,448 billion VND, but was still 3.78 times greater than the first quarter.

In the first six months, Hoa Phat recorded net revenue of VND 56,085 billion and a profit after tax of VND 1,831 billion. These percentages are 69% and 15%, respectively, for the same time frame.

The company anticipates revenue of VND 150,000 billion and an after-tax profit of VND 8,000 billion in 2023, up 6% and down 5% from the previous year, respectively. Thus, the group has achieved 38% of its revenue target and 23% of its annual profit target after six months.

In light of weak domestic and international market demand, the group produced 2.86 million tonnes of crude steel, a 34% decrease from the same period. In comparison to the first half of 2022, construction steel, billet, and hot-rolled coil (HRC) sales reached 2,9 million tonnes, a 27% decrease.

During the first six months of the year, the group's construction steel shipments totaled more than 1.6 million tonnes, a decrease of 30%. In addition to providing finished steel, Hoa Phat provides 36,000 tonnes of billet to other Vietnamese steel mills. The amount of HRC steel supplied to domestic and foreign markets decreased by 15% to 1.2 million tonnes.

In comparison to the first half of 2022, the production of steel pipe and corrugated iron decreased slightly to 325,000 and 175,000 tonnes, respectively. In addition, all types of prestressed steel (PC Bar, PC Strand, PC Wire) are supplied to the market. Also down 37% compared to the first half of 2022, 50,000 tonnes were produced.

In the agricultural sector, the group of billionaire Tran Dinh Long benefits when the price of pigs and chicken eggs increases. Approximately 900,000 eggs are produced per day from hygienic chicken eggs, ranking among the top three largest producers in the country and leading in the North. The market for home appliances also showed signs of improvement (production of air conditioners increased by 50 percent; sales of refrigerators, freezers, water purifiers, cooling fans, induction cookers, and dishwashers were strong).

Hoa Phat continues to invest in expanding existing industrial parks in the real estate sector. More than 1,133 hectares of Hoa Phat industrial park have been approved for planning.

Hundreds of billions of dong in the bank

According to the balance sheet, Hoa Phat's total assets increased by 5,959 billion dongs from the beginning of the year to 176,294 billion dongs as of June 30. This increase was primarily due to an increase in construction in progress. grew by 3,336 billion VND to reach 16,670 billion VND.

During the period, the company continued to invest VND 12,757 billion (an increase of VND 3,326 billion) in the Dung Quat Iron and Steel Complex project.

The value of inventory decreased by 3,466 billion dongs compared to the beginning of the year, but more significantly, the value of inventory provision decreased significantly from 1,236 billion dongs at the beginning of the year to 259 billion dongs as of June 30.

Total liabilities increased by 4,211 billion VND from the beginning of the year to 78,434 billion VND. At VND68,730 billion, the short-term debt ratio is high (representing 88% of total liabilities). After six months, loans and short-term financial leases totaled 51,748 billion VND, an increase of approximately 5,000 billion VND.

The total amount of long-term debt fell by 2,139 billion VND to 9,698 billion VND. Long-term debt consists primarily of loans and long-term finance lease debt, totaling 8,879 billion VND (down 2,273 billion VND from the beginning of the year).

According to the notes, Hoa Phat's interest expense for the second quarter alone reached VND 1,029 billion (equivalent to VND 11,4 billion per day), a 43% increase over the same period. In addition, the group earned 571 billion dongs in interest income from deposits and loans.

On the balance sheet as of the 30th of June, cash and cash equivalents totaled 13,253 billion VND, an increase of 4,928 billion VND from the beginning of the year. In addition, the short-term investment held to maturity in the form of term deposits totals 22,848 billion dong.

The yield on stocks

 On the stock market, Hoa Phat's HPG stock decreased by 0.35 percent to 28,300 dong on July 28. At this price, HPG has recovered by 57% since the beginning of the year and increased by 134% since November 2022, when it reached its lowest point.

Due to the recovery of the stock price, numerous Hoa Phat shareholders and investors have "landed" after "collecting losses."

Tran Dinh Long's fortune has also recovered strongly, reaching $2.4 billion at present, which is still less than the $3.2 billion peak he reached in 2022, but a significant increase compared to its estimated value. At the beginning of this year, there were 1,8 billion US dollars.

Ms. Nguyen Ngoc Linh, the proprietorial director of DNSE Securities Company, stated that three factors influence the future of steel stocks: the infrastructure construction industry (as evidenced by public investment in the industry), the civil construction industry (as evidenced by the domestic real estate market), and the Chinese real estate market.

The third factor is the most significant of the three because it directly influences the domestic steel price. The first and second factors have a significant impact on demand, and the Government's push to increase public investment this year, which is the primary driver of the steel industry's growth, will not continue to decline as long as the first and second factors continue to decline. weak.

It can be said that the recovery period for steel stocks was the last time this group benefited from a wave of public investment. However, according to Ms. Linh, to determine a longer-term momentum, both the domestic and Chinese real estate industries must recover.

According to the expert, there are two important considerations regarding steel stocks: First, this group typically recovers before the market and declines before the market when it falls. Therefore, when this group falls significantly, investors can assume that the market is experiencing a period of elevated volatility, and vice versa, when the market is favorable, this is the industry group that investors should focus on.

The steel industry is a short-cycle industry, and the growth period in terms of business results and stock prices typically does not exceed two years; therefore, investors should act. After the price increase cycle of this group of stocks, investors are prudent.

As reported by Dan Tri