Coated steel market in 8M2024
• Steel coated consumption in 8M2024 experienced positive growth, with total domestic volume reaching 1.527 million tons (+18.9% YoY). The southern region led in terms of volume, accounting for 922,951 tons (60.4%), though the northern region posted stronger growth at +21.8% YoY. Export volumes surged to 2.152 million tons (+48.0% YoY), primarily focused on key markets in ASEAN, the EU, and the U.S. Hoa Sen Group (HSG) maintained its leadership in the domestic market, capturing 34% of the northern market and 21% in the southern region. This represented a 0.5% increase in market share compared to the same period last year. Nam Kim Steel (NKG) also increased its market share by 0.5%, while Ton Dong A (GDA) saw a 2.3% decline, as its factory was operating at full capacity.• For Q4/2024, domestic volume is projected to reach 600,000 tons (+5.4% QoQ, -1.7% YoY), while export volume is expected to reach 587,500 tons (-14.6% QoQ, +0.5% YoY). Regarding commodity prices (HRC), we believe the decline in Chinese HRC prices will stabilize following real estate support policies. In addition, the recovery in HRC prices in the U.S. and EU has shown signs of improvement, raising expectations that the price gap between domestic and global HRC will widen towards the end of 2024, thereby improving export profit margins for companies.
• For the latter part of 2024, we recommend a short term buy on HSG shares, with a target price of VND 23,500, based on the following: 1) A recovery in the real estate market, particularly in the North, where HSG leads the market; 2) A reduction in the export ratio to below 60%, helping to reduce the impact of steel price fluctuations on gross profit margins; 3) HRC prices bottoming out, stabilizing domestic steel prices, and improving domestic profit margins in Q4/2024.
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