GDA – Prospect of recovery with attractive valuation
- In 1Q2024, GDA recorded revenue of VND 4,099bn (USD 165mn, +4%YoY, -11%QoQ), with galvanized steel‘s volume has recovered, compared to same period last year, and reached 203 thousand tons (+12%YoY, -7%QoQ). The recover was owing to the volume in foreign markets (especially from North America and EU, with restocking activites after holiday period, accounting for 70% of total output). Gross profit reached VND 347bn (USD 14mn, +18% YoY, +12%QoQ) and 1Q24 net profit after tax (NPAT) of VND 95bn (USD3.8mn, +16% YoY, +375%QoQ)
- The company plans to pay 2023 cash dividends at a rate of 10% (VND 1,000/share) and stock dividends at a rate of 20% (100 shares receive 20 new shares). It maintains the plan to establish a new galvanized steel factory (capacity of 1.2 million tons/year), and also issuing shares to existing shareholders, in order to supplement capital for the capital expenditure
- For the whole year 2024, we expect the average export output to be maintained at 40,000 tons/month (14% higher than in 2023, with recovery of export markets), while the domestic output can record significant growth, owing to real estate projects to promote construction activities (average domestic output to reach 35,000 tons/month, 21% higher than in 2023). Therefore, GDA can achieve sales output of 900 thousand tons (+16%YoY). Revenue and NPAT in 2024 can reach VND 21tn (+20%Yoy) and VND 360bn (+27%YoY), respectively. EPS 2024 can reach VND 3,075.
- The PE/PB forward of GDA are 9.4x/0.8x, respectively, showing that the company's recovery prospects in 2024 are not fully reflected in the stock price. With highlights from: 1/ The company has the second largest market share in the field of galvanized steel production and also has plans to establish a new factory, 2/ Market consumption has recovered; we think this stock is currently trading at an attractive valuation compared to other listed steel companies.
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