Coated steel market update for Q3/2024 – Maintaining growth
• In Q3/2024, total domestic consumption reached 629,433 tons (-1.4% QoQ, +23.9% YoY). Notably, the Northern region recorded outstanding growth (+41.5% YoY, +2.5% QoQ), while the Southern region remained the largest consumer with 365,270 tons. Exports continued to grow at a high rate in Q3/2024 (+39.4% YoY); however, the export share compared to domestic consumption dropped to 50% in September 2024, as global steel prices showed unfavorable conditions.• In September 2024, news of the People's Bank of China's economic stimulus package provided a positive boost to the steel industry, with Chinese HRC prices reacting by increasing 12% since the beginning of September. There is optimism that steel prices in Q4 will recover to the USD530–580/ton range. For 2025, we expect Vietnam's domestic steel industry to maintain a growth rate of +10% YoY, however, the export market may face challenges (with volumes down 5% YoY), due to anti-dumping and anti-subsidy investigations on CORE steel and a slow recovery in global demand.
• Based on the current information, we maintain a short-term investment recommendation for HSG stock in Q4, with a target price of VND 23.500 (+14% from October 18, 2024) due to: 1/ The domestic real estate market, especially in the Northern region, is recovering, where HSG leads the market share, 2/ The dependency on exports is gradually decreasing (59.7% in Q3/2024 compared to 68.9% in Q1), and 3/ Domestic steel prices are rising again, improving HSG's profit margins in Q4 2024.
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