- 2024-01-30T00:00:00
- Company Research
- HPG released its official Q4 2023 results that are consistent with the preliminary results announced on January 22, including revenue of VND34.4tn (USD1.4n; +21% QoQ & +33% YoY) and NPAT-MI of VND3.0tn (USD121.3mn; +48% QoQ, vs VND2.0tn/USD81.3mn net loss in Q4 2022).
- We attribute the QoQ improvement in HPG’s results to 1) sales volume picking up across products as domestic construction activities entered the peak season towards the end of the year, as well as export demand recovering, and 2) margin expansion from a low base, driven by improvements in both sales volume and selling prices.
- As domestic construction activities enter the year-end high season together with rising input material prices, HPG’s construction steel prices recorded 3 price increase events in Q4 2023, with a total increase of 6% vs end-September 2023. As of end-2023, HPG’s average domestic construction steel prices declined 5% compared to end-2022.
- The benchmark selling price of hot-rolled-coil (HRC) – which is one of HPG's key products – inched up 8% in end-December 2023 vs end-September 2023 due to the expectation for a recovery in demand from China and other developed markets.
- HPG’s key input material prices also recovered in Q4 2023, with benchmark iron ore and hard coking coal prices up more than 10% and 15% as of end-December 2023 vs end-September 2023, respectively. Despite input prices increasing faster than selling prices, we believe HPG expanded its gross margin in Q4 2023 thanks to increasing sales volume and the company stocking up input materials at lower prices. We note that HPG and other steel companies had kept inventory low for most of 2023, after a heavy destocking period during late 2022 – early 2023.
- HPG's recorded full-year 2023 revenue of VND119.0tn (USD4.9bn; -16% YoY) and NPAT-MI of VND6.8tn (USD279.0mn, -19% YoY). As these results fulfilled 102% and 100% of our full-year forecast for revenue and NPAT-MI, respectively, we foresee insignificant change to our forecasts for HPG as stated in our last Update Report (dated November 3, 2023).
Figure 1: HPG’s 2023 results
VND bn | Q4 2022 | Q3 2023 | Q4 2023 | QoQ | YoY | 2022 | 2023 | YoY | 2023F | 2023 as % of 2023F |
Net revenue | 25,826 | 28,484 | 34,384 | 21% | 33% | 141,409 | 118,953 | -16% | 116,881 | 102% |
Steel | 23,738 | 26,901 | 32,539 | 21% | 37% | 134,011 | 111,869 | -17% | 109,213 | 102% |
Real estate | 398 | 64 | 279 | 335% | -30% | 641 | 933 | 46% | 897 | 104% |
Agriculture | 1,690 | 1,519 | 1,566 | 3% | -7% | 6,757 | 6,152 | -9% | 6,771 | 91% |
Gross profit | -885 | 3,595 | 4,472 | 24% | N.M. | 16,763 | 12,938 | -23% | 12,664 | 102% |
SG&A expenses | -1,059 | -879 | -761 | -13% | -28% | -3,685 | -3,269 | -11% | -3,475 | 94% |
EBIT | -1,944 | 2,716 | 3,711 | 37% | N.M. | 13,078 | 9,669 | -26% | 9,190 | 105% |
Financial income | 1,437 | 851 | 732 | -14% | -49% | 3,744 | 3,227 | -14% | 3,433 | 94% |
Financial expense | -1,584 | -1,438 | -1,127 | -22% | -29% | -7,027 | -5,245 | -25% | -4,730 | 111% |
Net other gain/loss | 13 | 46 | 69 | 50% | 434% | 128 | 142 | 11% | 103 | 138% |
PBT | -2,079 | 2,174 | 3,385 | 56% | N.M. | 9,923 | 7,793 | -21% | 7,996 | 97% |
NPAT | -1,999 | 2,000 | 2,969 | 48% | N.M. | 8,444 | 6,800 | -19% | 6,796 | 100% |
NPAT-MI | -1,992 | 2,005 | 2,973 | 48% | N.M. | 8,484 | 6,835 | -19% | 6,828 | 100% |
Steel | -2,109 | 1,814 | 2,764 | 52% | N.M. | 8,163 | 6,304 | -23% | 6,420 | 98% |
Real estate | 152 | 34 | 88 | 155% | -42% | 299 | 317 | 6% | 286 | 111% |
Agriculture | -34 | 156 | 121 | -22% | N.M. | 22 | 215 | 856% | 121 | 177% |
Gross margin | -3.4% | 12.6% | 13.0% |
|
| 11.9% | 10.9% |
| 10.8% |
|
SG&A expenses | 4.1% | 3.1% | 2.2% |
|
| 2.6% | 2.7% |
| 3.0% |
|
EBIT margin | -7.5% | 9.5% | 10.8% |
|
| 9.2% | 8.1% |
| 7.9% |
|
NPAT-MI margin | -7.7% | 7.0% | 8.6% |
|
| 6.0% | 5.7% |
| 5.8% |
|
Source: HPG, Vietcap forecast (last updated November 3, 2023)
Figure 2: HPG’s 2023 steel sales volume
HPG’s sales volume (thousand tonnes) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q4 2023 QoQ % | Q4 2023 YoY % | 2022 | 2023 | YoY % | 2023 vs Vietcap’s 2023F | Vietcap’s 2023F | Vietcap’s 2024F |
Construction steel | 870 | 784 | 921 | 1,211 | +31% | +48% | 4,277 | 3,786 | -11% | 111% | 3,400 (-20% YoY) | 3,800 (+10% YoY) |
HRC | 482 | 734 | 766 | 801 | +5% | +36% | 2,626 | 2,783 | +6% | 99% | 2,800 (+7% YoY) | 2,800 (flat YoY) |
Steel pipes | 160 | 135 | 193 | 196 | +2% | +14% | 750 | 685 | -9% | 94% | 726 (-3% YoY) | 799 (+10% YoY) |
Galvanized steel sheets | 70 | 106 | 65 | 87 | +34% | +12% | 328 | 329 | +0% | 91% | 360 (+10% YoY) | 396 (+10% YoY) |
Source: HPG, Vietcap forecast (last updated November 3, 2023)
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