NKG - Difficulties are temporary
NKG is facing several barriers in order to achieve earning growth in 2018. The rapid hike of HRC price in 1H2018 has put huge pressure on NKG’s profitability. Moreover, harsh competition in the domestic coated steel market also affected its gross margin and caused rising interest expense, further lowering its net margin. These short-term pessimistic catalysts have been depressing the share price, while the long-term advantages regarding output capacity and selling ability remain the positive elements for the business.
Based on the intermediate term potential of the company, we made several adjustments in our forecast including volume growth and gross margin to evaluate NKG’s profitability in 2018. NKG price is adjusted with a target of VND 18,000/share, total return is estimated at 42% from the closing price on August 30th, 2018 and we recommend to BUY the stock.
Nam Kim Steel Joint Stock Company is a Vietnam-based company operating in the steel industry. The Company is engaged in the manufacturing of hot-dip 55% zinc-aluminium alloy coated steel branded Naki Zincalum, hot-dip zinc coated steel branded Naki Zinc, pre-painted zinc coated steel and pre-painted zinc-aluminium coated steel branded Naki Color, galvanized steel pipe and black steel pipe branded Naki Pipe, hot-rolled steel sheet in coil and cold-rolled steel sheet in coil. It is also involved in the trading of various types of steel products and the provision of ground freight transportation 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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