- 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.
Powered by Froala Editor