- HSG reported Q3 FY2022 (April 1 to June 30, 2022) revenue of VND12.2tn (USD522.6mn; -6% YoY and -4% QoQ) and NPAT-MI of VND265bn (USD11.4mn; -84% YoY and +13% QoQ). Despite plummeting YoY from a historic high in Q3 FY2021, HSG’s Q2 FY2022 NPAT-MI improved QoQ on the back of gross margin expansion. 

- HSG’s gross margin improved to 13.1% in Q3 FY2022 from 11.3% in Q2 FY2022. In Q2 FY2022, prices of hot rolled coil (HRC) and finished galvanized steel experienced a short recovery following a strong correction in late 2021. These price movements created an opportunity for galvanized steel companies to buy up input HRC when prices were deemed low, in turn relieving margin pressure created by high input HRC prices. 

- Although Q2 FY2022 gross profit was broadly in line with our forecast, HSG experienced surging export-related expenses (booked under SG&A expenses) and FX losses in Q3 FY2022, resulting in NPAT-MI that trailed our forecast. We are seeking further comments from the company regarding these accounts.