HPG - Maintaining high NPAT growth due to the HRC segment
We think HPG can maintain strong NPAT growth momentum in 2021 mainly due to the favorable market condition in the HRC segment. Currently, steel demand has been recovering quickly in large markets, such as China, India and the EU. Besides, weak iron ore supply and expensive transportation costs for steel imports led to increasing imported HRC price. This brings a higher gross margin for domestic HRC manufacturers, including HPG. Besides, we expect that the company’s steel pipe and coated steel sales can grow strongly owing to the internal HRC capacity. Hence, the flat steel segment can contribute half of the total gross profit in 2021 and be the most profitable segment. In the construction steel segment, HPG can maintain its price competitiveness and increase its selling volume at a higher pace compared to the industry.
Using FCFF, PE, and PB methods, we come up with a fair value of VND 55,200 per share (+19% from our TP in the 2021 strategy report). Together with a cash dividend in the next 12 months of VND 500/share, the total return is 20%, based on the closing price as of March 31st, 2021. Hence, we reiterate our BUY recommendation
Hoa Phat Group JSC. Hoa Phat Group Joint Stock Company is a Vietnam-based company primarily engaged in the steel sector. The Company's operation is organized under four segments, including Steel segment, which manufactures steel and cast iron in various forms, such as sheets, bars, rolls and pipes, as well as steel-making materials and steel drawing machinery; Industrial segment, which produces and trades construction and mining vehicles and equipment, along with household appliances, refrigerators, home and office furniture; Agriculture segment, which farms cattle and poultry, processes and preserves meat, as well as manufactures and distributes animal feeds, fertilizers and agricultural supplies, and Real Estate segment, which constructs civil engineering projects and leases houses, offices and land.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
RongViet Research reports are diversified and abundant, along with in-depth analysis and performed by experienced, highly-qualified and knowledgeable teams. With the objectives of transparency, accurate and timely manner, RongViet believes that our products would always be important sources of information for customers/investors’ investment decisions.”
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.