(HSV VIETNAM GROUP) – VEIL's investment in Hoa Phat as of December 14 was estimated to be worth about 156 million USD, corresponding to a holding volume of about 140 million shares.
According to the latest updated report, Hoa Phat shares (code HPG) have risen to become the largest investment in the portfolio of Vietnam Enterprise Investments Limited (VEIL) - Dragon Capital (NAV 1.7 billion USD) as of December 14 with a proportion of 9.14%. This is the first time HPG shares have returned to this position after 2 years.
At the end of 2021, HPG shares accounted for more than 12% of VEIL's NAV. However, this foreign fund has been diligently selling leading stocks in the steel industry last year. Hoa Phat even fell out of the top 10 largest investments in the fund's portfolio in the first half of November last year. At that time, VEIL only held less than 78 million HPG shares.
This foreign fund then returned to strongly collect HPG shares, especially in the period from early December last year to mid-January 2023. As of December 14, VEIL's investment in Hoa Phat was worth about 156 million USD, corresponding to a holding volume of about 140 million shares. It is estimated that this foreign fund has bought a net of 62 million HPG shares over the past year.
With its leading position in the industry and large trading scale, not only VEIL, Hoa Phat is also the preferred choice of many large foreign funds such as VinaCapital, LionGlobal Vietnam Fund... Besides, this stock is also regularly included in important index baskets such as VN30, MVIS Vietnam Local Index, FTSE Vietnam Index, FTSE Vietnam 30 Index,... and of course will have a certain proportion in the portfolio of large ETFs such as Fubon ETF, V.N.M ETF, FTSE Vietnam ETF,…
HPG had a period of 9 consecutive months (from November 2022 to July 2023) of strong net buying by foreign investors. Although the trend has reversed in recent months, the leading stock in the steel industry is still the name with the strongest net purchase in the market from the beginning of 2023 until now with a value of nearly 3,000 billion VND.
Signs of recovery are increasingly clear
Hoa Phat is currently the leading industrial manufacturing group in Vietnam, operating in 5 fields including Iron and Steel (construction steel, hot rolled steel), Steel products (steel pipes, galvanized steel sheets, hot rolled steel wire, container shells and prestressed steel), Agriculture, Real Estate, and Electrical Appliances.
Steel production is a core field, accounting for 90% of the group's revenue and profit. With a capacity of over 8.5 million tons of crude steel/year, Hoa Phat is the largest steel manufacturer in Southeast Asia. The Group holds Vietnam's No. 1 market share in construction steel and steel pipes, and is among the top 5 largest galvanized steel manufacturers in Vietnam.
Hoa Phat has a total of 7 blast furnaces for steelmaking, including 4 furnaces in Dung Quat and 3 furnaces in Hai Duong with a crude steel production capacity of 8.5 million tons/year. In addition, Hoa Phat also has an electric furnace in Hung Yen to produce steel from scrap, with a capacity of 400,000 tons of steel/year. After hitting bottom in early 2023, Hoa Phat's sales output has been recovering more and more clearly in recent months.
In November 2023, Hoa Phat produced 623,000 tons of crude steel, equivalent to the previous month. Sales output of hot rolled coil (HRC) steel products, construction steel, high quality steel, and steel billet reached 709,000 tons, up 12% compared to October and up 60% over the same period last year. This is the group's highest sales volume in 20 months.
In the cumulative 11 months, Hoa Phat has produced more than 6 million tons of crude steel, down 14% over the same period in 2022. Sales volume of steel products reached 5.96 million tons, down 10% over the same period last year. Of which, construction steel and high quality steel reached 3.3 million tons, down 15% compared to the first 11 months of 2022. Export activities of these types of steel contributed 695,000 tons, down 37%. Steel billets supplied to the domestic and export markets are 109,000 tons.
Not only output, domestic construction steel prices are also tending to recover from the end of November after 19 consecutive downward adjustments. According to VCBS assessment, the recovery of steel prices in recent weeks is mainly due to rising input prices and short-term expectations for the Chinese steel market, which have somewhat impacted Vietnamese steel prices.
Regarding the outlook for the 2024-25 period, VNDirect assesses that Hoa Phat has many positive supporting factors. This securities company forecasts that the group's revenue in 2024 will reach 130,145 billion VND (up 11% compared to 2023) and net profit will reach 14,202 billion VND (up 120% compared to 2023). By 2025, the net profit of the leading enterprise in the steel industry could reach 23,316 billion VND.
Similarly, SSI Research also recently adjusted Hoa Phat's 2024 profit forecast to VND 11,200 billion (an increase of 82% compared to 2023), mainly due to an increase in consumption estimates. Accordingly, SSI Research assumes that Hoa Phat's construction steel and HRC consumption output in 2024 will reach 4.24 million tons and 2.9 million tons, respectively (an increase of 15.3% and 4.7% compared to 2023).
Ha Diem HSV