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HSG – Tough times have passed

• In 4Q of fiscal year (FY) 2023, HSG recorded revenue of VND 8,235bn (USD 336mn, -28%YoY, -7%QoQ), with sales volume of 390 thousand tons (+25%YoY, +4%QoQ), owing to the volume in foreign markets (North America, EU, Asia). The 4Q gross profit margin (GPM) recovered to 13.2%, while SG&A costs decresead to VND 627bn. HSG recorded a 4Q NPAT-MI of VND 438bn (improved significantly compared to 3Q).
• For FY024, the company thinks that: 1/ the steel market has passed the most difficult period; 2/ 2024 output can reach 1.56 million tons (+11.4%YoY, contributed by domestic and foreign markets); 3/ focusing on perfecting the Hoasen Home system.
• For FY2024, we forecast that HSG can record revenue of VND 34.8tn (VND 1.42bn, +10%YoY) and GPM of 11.6% (equivalent to the average level in the 2H of FY2023). HSG's NPAT-MI can reach VND 782 bn (34x times higher than FY2023). 2024EPS can reach VND 1,180.
• We use two methods (FCFE and PB) to evaluate the stock. Our fair value comes at VND 21,500 value per share, implying a total return of +9% as of the closing price on November 07th, 2023, equivalent to an ACCUMULATE recommendation for Hoa Sen Group Jsc