HSG - FY2024 guidance with strong profit growth from FY2023’s low base - AGM Note
  • 2024-03-18T00:00:00
  • Company Research
  • We attended HSG’s annual general meeting (AGM) in HCMC on March 18, 2024.
  • HSG’s management set its FY2024 guidance (HSG’s financial year-end is September 30) with two scenarios for FY2024 NPAT of VND400bn (USD16.3mn) and VND500bn (USD20.4mn) vs FY2023’s actual NPAT of VND30bn (USD1.2mn).
  • HSG’s 2024-2029 strategy outlines potential expansion into other businesses with a maximum investment of VND5.0tn (USD204.1mn).
  • Shareholders approved the FY2024 ESOP plan with 5 million shares (equivalent to 0.8% outstanding shares) issued at VND10,000/share with a one-year lockup period. 
  • Shareholders approved a 1) FY2023 cash dividends of VND500/share, 2) the FY2024 remuneration scheme for the BOD and BOM, and 3) the FY2024 fund allocation scheme. 

HSG proposed FY2024 guidance with strong profit growth from FY2023’s low base. Management guides for two FY2024 business performance scenarios (see Figure 1). According to the guidance, the two scenarios for FY2024 NPAT-MI are VND400bn/VND500bn (USD16.3mn/USD20.4mn) vs FY2023’s actual NPAT of VND30bn (USD1.2mn). The FY2024 guidance reflects HSG’s expectation for a recovery in demand, both in domestic and export markets. We note that HSG's recent historical guidance has not been a good indicator of its actual results (see Figure 2). In addition, HSG’s NPAT scenarios are substantially lower than our forecast of VND1.5tn (USD63.1mn). More details on our forecast for HSG can be found in our latest Update Report, Galvanized Steel Sector Update - HRC price rally to support 2023F earnings, but share prices have run ahead of fundamental developments, dated February 22, 2023.

Figure 1: HSG’s FY2024 guidance compared to Vietcap’s forecast

(VND bn)

HSG’s FY2023 results

HSG’s FY2024 guidance

Vietcap’s 2024F 

Q1 FY2024

 

 

Scenario 1

Scenario 2

 

 

Revenue

31,651

34,000 

36,000

55,364 

9,073

NPAT

30

400

500

1,547

103

Source: HSG, Vietcap. Note: HSG’s financial year (FY) end is September 30.

Figure 2: HSG’s guidance track record

(VND bn)

FY2017

FY2018

FY2019

FY2020

FY2021

FY2022(*)

FY2023 (**)

FY2024 (**)

NPAT guidance

1,650

1,350

500

400

1,500

1,500/ 2,000/ 2,500

100/ 300

400/ 500

NPAT actual

1,332

409

361

1,153

4,313

251

30

 

Source: HSG, Vietcap. Note: HSG’s financial year (FY) end is September 30. Note: (*) HSG proposed three different scenarios for FY2022, (**) HSG proposed two different scenarios for FY2023 and FY2024.

HSG's 2024-2029 strategy outlines potential expansion into various fields beyond their current operations. This includes finance, banking, securities, insurance, real estate, mechanics, semiconductors, education, healthcare, tourism, and even cultural activities. With a maximum investment of VND5.0tn, the group seeks diversification and growth across a broad spectrum of industries.

FY2024 management remuneration approved. Shareholders approved the FY2024 management remuneration plan at an amount equivalent to 1.5% of actual FY2024 NPAT, which is similar to the FY2023 reward scheme. This remuneration, which is based on FY2024 business performance, will be distributed to key employees from the BOD and BOM. 

FY2024 fund allocation plan approved. Shareholders approved the FY2024 fund allocation scheme as follows: 1) maximum 4% of actual FY2024 NPAT for a bonus & welfare fund and 2) a maximum 4% of actual FY2024 NPAT for a charity fund. This allocation scheme for FY2024 is similar to the FY2023 scheme.

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