HSG – Expectation of a Margin Spring in 2H/FY22-23
- Profits tumbled amid falling demand and high-priced materials in FY21-22. Gross profit margin slumped to 9.9%, versus 18.1% of the previous fiscal year. Revenue added 2% YoY to VND 49,711 bn but PAT-MI tumbled -94% YoY to VND 251 bn.
- Domestic sales to lead growth and margin recovery in FY22-23. Gross margin is expected to return to the positive territory from Q2 and recover better in 2H with more support from the returning demand in Western markets while competition with China and India relaxing. The whole-year gross margin could rise to 12.4%. Revenue and PAT-MI could reach VND 34,513 bn (-31% YoY) and VND 427 bn (+70% YoY).
- Applying three valuation methods including discounted FCFF, P/E and P/B, we arrive at a target price for HSG of VND 14,400/share, which is equivalent to an ACCUMULATE recommendation with an upside of 5%, based on the closing price of December 19th, 2022. The stock is currently trading at PER of 31.7 and PBR of 0.8. The EPS and BVPS for FY22-23 are VND 663/share and VND 18,021/share, or forward PER and PBR are 20.7 and 0.8, respectively.
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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