FREE

GDA – A notable company in the steel industry

• Ton Dong A (GDA) – one of the largest galvanized steel manufacturers has been traded on the Upcom market since September 2023.  According to VSA, the company has the second-largest sales market share in Vietnam (the market share in 2022 and 8M2023 reached 17.11% and 18.44%, respectively) which illustrate the company's significant position in the steel market. Export volume accounts for ~56% of total volume; with the main markets being the EU, North America and Southeast Asia countries, which are also Vietnam's main export markets. 
• In 1H2023, GDA recorded revenue of VND 8,734bn (USD 361mn, -33%YoY), with sales volume of 376.6 thousand tons (-8%YoY, fulfilled ~50% of its business plan); and ~65% consumed volume was to foreign markets (ASEAN, EU) owing to rising demand in these countries, especially from 2Q23. The 1H gross profit margin (GPM) recovered to 7% and gross profit reached VND 610bn. In terms of the bottom line, GDA recorded a 1H NPAT-MI of VND 204bn (-38%YoY, after recording a net loss in 2H22). The result fulfilled ~102% of its profit plan.
• For 2H2023, company expects that the average export volume can be at 30,000-35,000 tons/month (equivalent to the 1H23 average export volume), which showed the stable demand from their main markets. As a result, we expect that GDA can reach the 2H23 sale volume of 350 thousand tons (2023 total sale volume can reach 726.6 thousand tons, fulfilled ~97% of its business plan). Our hypothesis is that the average HRC price could be at the low-level of USD 600/ton, hence the 2H23 revenue would be VND 8,117bn (2023 total revenue at VND 16.8tn, fulfilled ~100% of its business plan).
• Currently, the stock is trading at a PBR of 0.8x, which is relatively lower than peers (galvanized steel companies are trading at 1.0x). With the following points: 1/ Company with second-largest market share on galvanized steel production, 2/ Recovering in foreign markets, we think that the stock is currently trading at an attractive valuation, compared to other listed steel companies