- HSG reported Q1 FY2023 revenue of VND7.9tn (USD335.5mn; -53% YoY & flat QoQ) and a net loss of VND680bn (USD28.8mn) compared to net profit of VND638bn (USD27.0mn) in Q1 FY2022. This is HSG’s second consecutive quarterly loss following Q4 FY2022’s net loss of VND887bn (USD37.6mn). We attribute the weak Q1 FY2023 results to a slowdown in demand in both the domestic and export markets as well as high-cost input hot rolled coil (HRC) inventory.

- Unlike NKG which incurred a loss at the gross profit level in the same quarter (details of NKG’s Q4 2022 results can be found in our Earnings Flash, dated January 27, 2023), HSG was able to record gross profit of VND160bn (USD6.8mn) compared to a loss in the previous quarter. However, HSG still incurred a VND608bn (USD25.8mn) loss at the operating profit level in Q1 FY2023, which we attribute to stagnant sales and declining commodity prices. 

- HSG’s galvanized steel sheet and steel pipe sales volume dropped 44% YoY to 222,300 tonnes in October – November 2022. Meanwhile, both input HRC and galvanized steel selling prices experienced a more than 30% correction as of end-2022 following their peaks in April 2022. This market situation caused steelmakers to be trapped with high purchased input costs while subsequent sales were slow, resulting in a strong gross margin contraction throughout June – December 2022. 

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