Analyst Pin-board HSG – Surging Steel Prices are likely to Bring Another Good Year
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· The Russia-Ukraine war and the Western’s sanctions on Russia have led to a disruption in steel production and steel import over the Western countries. Steel prices in the EU have surged to a new peak in March 2022. HSG has finalized a million tons of HRC at low-price, which suffices to sell until the end of August 2022 and makes it ready to capture the high-pricing opportunity. · The FY2021-2022 revenue and NPAT-MI are forecasted to be VND 66,408 bn (USD 2,913 mn, +36%) and VND 4,172 bn (USD 183 mn, -2%), respectively 19% and 32% higher than our previous forecast. The growth driver stems from higher export volumes and prices in the North America and the EU markets. For the FY2022-2023, we foresee a downturn in export volume and selling prices, caused by a recovery of steel production globally. Such developments will likely result in a significant negative growth in the bottom line. · HSG is trading at a TTM PER of 4.3x, lower than its three-year average PER of 7.6x. With FY 2021-2022 EPS and BVPS of VND7,863/share and VND29,718/share, respectively, the equivalent PER forward is 4.8x. We revise up our target price by 15% from the latest valuation to VND 47,000/share, to reflect the bright outlook for profits of the coming quarters. This translates into a total expected return of 25%, compared to the closing price of March 29th, 2022. We have a BUY rating for this stock. |
Hoa Sen Group is a Vietnam-based company primarily engaged in the steel industry. It manufactures galvanized steel products, color coated steel products, cold rolled steel coils, steel tubes and other steel products. It is also involved in the manufacture of plastic pipes and fittings, as well as plastic roofing sheets. In addition, the Company trades construction fixtures; operates hotels, restaurants and retail complexes; constructs civil and industrial structures, and provides logistics services.
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.
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