Company Quarterly Earnings Update – HPG VN – 2018 Q3

Summary of the 9M 2018 results of Hoa Phat Group JSC (HPG VN) 

9M/2018 results: highlights
  • HPG performed well in 9M/2018. Net revenue advanced by 24.4% yoy to VND 41,450bn thanks to higher sales volume and higher steel selling prices. HPG sold a total of 1.69 million tons of construction steel, up by 6.5% yoy. The average selling price was about VND 13.3 million/ton, up by 21.4% yoy.
  • The gross profit advanced by 21.7% yoy, which was higher than the sales volume. HPG benefited from rising steel selling prices, more than compensating for the increase of input material prices. Net profit grew by 21.3% yoy to VND 6,808bn.
  • HPG’s financial leverage was moderate with a debt-to-asset ratio of 0.31x and debt-to-equity ratio of 0.56x. The company has disbursed a total of VND 28,000bn for two major projects, including VND 25,000bn for the Dung Quoc steel complex.
Outlook
  • Steel demand in Vietnam is likely to remain strong thanks to the solid development of the construction sector, which is supported by the rising demand for housing and infrastructure development. HPG is the lowest cost construction steel producer in Vietnam. This competitive advantage should allow HPG to steadily increase market share. As for 2019, we expect HPG’s market share to increase to 33%, up from 24% in 2018.
  • We project HPG’s bottom line to improve by 8.6% yoy in 2018 and by 13.8% yoy in 2019. The bottom line should even accelerate by 22.5% and by 22.9% in 2020 and in 2021 respectively as the company is ramping up the utilization rate of the Dung Quat steel complex.
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