HSG – Q1 FY2024 NPAT-MI slides despite revenue improving QoQ – Earnings Flash
  • 2024-01-29T00:00:00
  • Company Research
  • HSG posted a large divergence between revenue and NPAT-MI QoQ growth in Q1 FY2024, with revenue growing 12% QoQ but NPAT-MI plummeting to VND103bn (USD4.2mn) from VND14bn (USD0.6mn) in Q3 FY2023. 
  • The positive Q1 FY2024 revenue result was due to robust galvanized steel sheet and steel pipe volume growth of 18% QoQ and 32% YoY. We believe HSG’s strong sales volume growth in Q1 FY2024 was driven mainly by export sales as we observed that the total industry’s exported galvanized steel sheet and steel pipe volume grew 23% QoQ and 57% YoY. 
  • The divergence between revenue and NPAT-MI growth in Q1 FY2024 was driven by 1) the gross margin compressing to 10.5% from 13.2% in Q4 FY2023 and 2) SG&A expenses on sales surged to 9.2% from 7.7% in Q4 FY2023, mainly driven by 86% and 26% increases in labor expense and expenses for export activities, respectively. We note that Q4 FY2023 SG&A expenses on sales reached their lowest quarterly level during the FY2022-2023 period.
  • As HSG’s Q1 FY2024 results trailed our expectations, we anticipate a downside risk to our forecast, pending a fuller review. We note that HSG’s financial year (FY) end is September 30.

HSG’s Q1 FY2024 results

VND bn

Q1 FY2023

Q4 FY2023

Q1 FY2024

QoQ

YoY

FY2024F

Q1 FY2024 as % of FY2023F

Net revenue

7,917

8,107

9,073

12%

15%

55,364

16%

Gross profit

160

1,072

950

-11%

494%

6,692

14%

SG&A expenses

-768

-627

-839

34%

9%

-4,678

18%

EBIT

-608

445

110

-75%

N.M.

2,014

5%

Interest expenses

-48

-36

-25

-30%

-47%

-141

18%

FX gain/loss

-34

89

19

-78%

N.M.

2

967%

Other gain/loss

23

6

11

82%

-53%

59

18%

PBT

-667

504

115

-77%

N.M.

1,934

6%

NPAT-MI

-680

438

103

-76%

N.M.

1,547

7%

GPM

2.0%

13.2%

10.5%

 

 

12.1%

 

SG&A exp./Sales

9.7%

7.7%

9.2%

 

 

8.5%

 

OPM

-7.7%

5.5%

1.2%

 

 

3.6%

 

NPM

-8.6%

5.4%

1.1%

 

 

2.8%

 

Source: HSG, Vietcap forecast (last updated February 22, 2023). Note: HSG’s financial year (FY) end is September 30.

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