HPG – Dung Quat 02 Complex to be the long-term growth driver
- The Dung Quat 02 Steel Complex (DQ02) has a designed capacity of 5.6 mn tons of HRC/year, divided into 2 phases. In which, phase 01 has the capacity of 2.8 mn tons/year, and it is expected to start trial production in the 4Q24, and begin operation from the 1Q25. As of March 2024, the project has completed 50% of phase 1’s total progress, in which HPG has completed 90% of the construction of main items (roller mills, steel smelting, iron smelting, coke smelting, and raw material processing plants) and completed more than 50% of the total steel structure.
- With the current construction progress of the Dung Quat 02 complex, we believe the factory will be able to be put into operation from the 1Q25 as planned, with relatively high efficiency (utilization rate of 80% for phase 01, corresponding to 2025 HRC output of 2.24 million tons). Thereby, HPG's revenue in 2025 can reach VND 197 tn (USD 8.1bn, +35%YoY), with 2025 gross profit can reach VND 30.6tn (USD 1.3bn, +59%YoY), and net profit to reach VND 21tn (USD 864mn, +85%YoY). The corresponding EPS in 2025 will be VND 3,380.
- We use two methods (FCFF and PB) to evaluate the stock; our fair value comes at VND 36,600 per share, implying a total return of +20%as of the closing price on April 02nd, 2024, equivalent to a BUY recommendation for long-term investment purpose for Hoa Phat Group Jsc
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