Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

Thematic (Sector/Industry)

In my previous insight, I covered how Hoa Phat Group and Hoa Sen Group were strong value investment picks, and were not financially impacted from the plunging price of steel.  This insight will take a further look at how Vietnam stands out as a positive outlier compared to the global steel industry, as a significant number of major steel companies are currently not profitable.  Vietnam can also be considered a positive outlier when compared to frontier and emerging asia, as many stocks in Vietnam are discounted to other frontier and emerging markets in Asia.  Vietnam’s steel industry is therefore a significant area for investment when compared to larger companies in developed markets, as well as frontier and emerging Asia.  The struggle in Vietnam has mainly been for small and mid cap companies in this industry, although some of these companies are exceptions.

In my previous insight, I covered how Hoa Phat Group and Hoa Sen Group were strong value investment picks, and were not financially impacted from the plunging price of steel.  This insight will take a further look at how Vietnam stands out as a positive outlier compared to the global steel industry, as a significant number of major steel companies are currently not profitable.  Vietnam can also be considered a positive outlier when compared to frontier and emerging asia, as many stocks in Vietnam are discounted to other frontier and emerging markets in Asia.  Vietnam’s steel industry is therefore a significant area for investment when compared to larger companies in developed markets, as well as frontier and emerging Asia.  The struggle in Vietnam has mainly been for small and mid cap companies in this industry, although some of these companies are exceptions.

Vietnam's Steel Industry Is a Global Outlier

External broker reports(aggregated public sources), Rong Viet Securities

Rong Viet Securities

External broker reports(aggregated public sources)

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Equity Bottom-Up

<ul><li>Using a combination of the cash flow discount method (DCF) and the comparison method (P/B, P/S), we offer a target price for HSG stock at VND 24,000, combined with a cash dividend of VND 500/share, the expected profit is 27%.</li><li>Thanks to the advantages of a long-standing brand, large factory capacity and comprehensive distribution system, HSG's galvanized steel market share has always maintained at 29% for many years.</li><li>Along with the expectation that the steel price cycle will recover from 2025, we forecast HSG's profit after tax (NPAT) in the period 2025-2029 to reach a CAGR of 11%</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Using a combination of the cash flow discount method (DCF) and the comparison method (P/B, P/S), we offer a target price for HSG stock at VND 24,000, combined with a cash dividend of VND 500/share, the expected profit is 27%.Thanks to the advantages of a long-standing brand, large factory capacity and comprehensive distribution system, HSG's galvanized steel market share has always maintained at 29% for many years.Along with the expectation that the steel price cycle will recover from 2025, we forecast HSG's profit after tax (NPAT) in the period 2025-2029 to reach a CAGR of 11%Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSG - A Leading Position in the Coated Steel Industry Seeking Growth Strategies

<ul><li>Using a combination of the cash flow discount method (DCF) and the comparison method (P/B, P/S), we offer a target price for HSG stock at VND 24,000, combined with a cash dividend of VND 500/share, the expected profit is 27%.</li><li>Number one position in the domestic galvanized steel industry: Thanks to the advantages of a long-standing brand, large factory capacity and comprehensive distribution system, HSG's galvanized steel market share has always maintained at 29% for many years.</li><li>Along with the expectation that the steel price cycle will recover from 2025, we forecast HSG's profit after tax (NPAT) in the period 2025-2029 to reach a CAGR of 11%.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Using a combination of the cash flow discount method (DCF) and the comparison method (P/B, P/S), we offer a target price for HSG stock at VND 24,000, combined with a cash dividend of VND 500/share, the expected profit is 27%.Number one position in the domestic galvanized steel industry: Thanks to the advantages of a long-standing brand, large factory capacity and comprehensive distribution system, HSG's galvanized steel market share has always maintained at 29% for many years.Along with the expectation that the steel price cycle will recover from 2025, we forecast HSG's profit after tax (NPAT) in the period 2025-2029 to reach a CAGR of 11%.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSG VN - A Leading Position in the Coated Steel Industry Seeking Growth Strategies

External broker reports(aggregated public sources), Vietcap

Vietcap

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<ul><li>We upgrade our rating for HSG to MARKET PERFORM from UNDERPERFORM as we raise our target price (TP) by 13% to VND19,600/share.</li><li>Our higher target price is driven by rolling our TP to end-FY2025 (end-Sep CY2025) and respective 1%/6%/6% increases in 2026/27/28F NPAT-MI forecasts, which all outweigh 10%/6% cuts to our FY2024/25F NPAT-MI forecasts, respectively.</li><li>The revised FY2024F NPAT-MI forecast reflects (1) a 60bps reduction in our GPM forecast and (2) a 20bps increase in SG&amp;A/sales, offsetting a lower effective tax rate assumption (revised to 10% from 20%) following a lower-than-expected 9M FY2024 effective tax rate. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We upgrade our rating for HSG to MARKET PERFORM from UNDERPERFORM as we raise our target price (TP) by 13% to VND19,600/share.Our higher target price is driven by rolling our TP to end-FY2025 (end-Sep CY2025) and respective 1%/6%/6% increases in 2026/27/28F NPAT-MI forecasts, which all outweigh 10%/6% cuts to our FY2024/25F NPAT-MI forecasts, respectively.The revised FY2024F NPAT-MI forecast reflects (1) a 60bps reduction in our GPM forecast and (2) a 20bps increase in SG&amp;A/sales, offsetting a lower effective tax rate assumption (revised to 10% from 20%) following a lower-than-expected 9M FY2024 effective tax rate. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSG - GPM to Compress in Q4 FY24 as Steel Prices Decline - Update

Hoa Sen Group (HSG) - GPM to Compress in Q4 FY24 as Steel Prices Decline

Vietnam

Hoa Sen Group is Vietnam's leading manufacturer and trader of steel sheets and a major exporter of steel sheets in Southeast Asia. The company produces galvanized, pre-painted galvanized, and aluminum-zinc alloy coated steel sheets, as well as steel pipes and plastic building materials. Its headquarters are located in Binh Duong Province, Vietnam, and it was founded on August 8, 2001.

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Hoa Sen (HSG VN)

Vietnam's Steel Industry Is a Global Outlier

In my previous insight, I covered how Hoa Phat Group and Hoa Sen Group were strong value investment picks, and were not financially impacted from...

Nomadic Equity

HSG - A Leading Position in the Coated Steel Industry Seeking Growth Strategies

Using a combination of the cash flow discount method (DCF) and the comparison method (P/B, P/S), we offer a target price for HSG stock at VND 24,000

Rong Viet Securities

HSG VN - A Leading Position in the Coated Steel Industry Seeking Growth Strategies

Along with the expectation that the steel price cycle will recover from 2025, we forecast HSG's profit after tax (NPAT) in the period 2025-2029 to...

Rong Viet Securities

HSG - GPM to Compress in Q4 FY24 as Steel Prices Decline - Update

We upgrade our rating for HSG to MARKET PERFORM from UNDERPERFORM as we raise our target price (TP) by 13% to VND19,600/share.

Vietcap

Hoa Sen Group (HSG) - GPM to Compress in Q4 FY24 as Steel Prices Decline

We upgrade our rating for HSG to MARKET PERFORM from UNDERPERFORM as we raise our target price (TP) by 13% to VND19,600/share.

Vietcap

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