November 17, 2009
Hoa Phat Group Joint Stock Company (HOSE: HPG)
Sector: Steel industry
Establishment: 26/10/2001
Website: www.hoaphat.com.vn
Listed date: November 15, 2007
Business highlights
Stock statistics as at November 17, 2009
Establishment: HPG was initially established in 1992 and restructured
st
into a holding company on Sep 1 2007. HPG currently consists of 11
subsidiaries and 5 associates.
Market cap (VNDb)
Key business activities:



Manufacturing and trading steel, steel pipe (76% revenue);
Manufacturing furniture, refrigeration engineering, equipment and
accessories, (15% revenue);
urban plus industrial zone development and construction (3%
revenue);
Shareholding structure: As at 16 November 2009, ownership
structure of HPG is as the following:
Current price (VND)
67,000
52 weeks high
81,500
196.36
52 weeks low
24,300
Chartered capital (VNDb)
1,964
TTM P/E (x)
10.60
Adjusted EPS (VND)
6,745
P/B(x)
Foreign ownership (%)
31.85
30 day av trading volume (Mil)
Outstanding share (mil)
Dividend yield (%)
% ownership
Others
69.19
Foreign Investors
31.81
Total
100.00
Market position: occupies 8.5% market share of steel industry
nationwide, main market of HPG currently concentrate in the
Northern provinces. For steel pipe, HPG is ranking the top two
companies in Vietnam with market share of 40% black steel pipe and
18% zinc-plated steel pipe. Also, HPG is market leader in providing
office furniture.
1.12
4,20
2.88
th
Structure of Revenue and Net profit at 30 June 2009
Revenue (%)
Construction machines
Commercial trading of steels
Structure
14,040
6.1%
Net profit (%)
6.9%
3.8%
4.2%
Long steels
45.9%
48.7%
Furniture
12.3%
10.7%
Refrigeration engineering
Steel pipe
Industrial Zone development
6.5%
5.2%
20.0%
15.1%
5.4%
9.2%
Technical Price Chart
Main competitors in supplying steel for construction: Pomina Steel,
Thai Nguyen Steel and Vinakyoei Steel.
Subsidiaries, Joint Ventures and Associates:
Capital
(VNDbi)
Ownership
(%)
Hoa Phat Equipment & Accessories Co., Ltd
140
99.64
Hoa Phat Furniture JSC
200
99.50
Hoa Phat Steel Pipe Co., Ltd
200
99.75
Hoa Phat Refrigeration Engineering Co., Ltd
150
99.67
Hoa Phat Urban Development & Construction
150
99.33
50
99.00
1,000
85.00
Name
Hoa Phat Trading Co., Ltd
Hoa Phat Steel Jsc
Hoa Phat Energy Jsc
Hoa Phat – Laos Company
150
49.00
48
100.00
Current investment:


At the end of 2009, contribution of Hoa Phat Iron and Steel
Complex would improve steel quantity from 250,000 tons/year to
600,000 tons/year.
HPG is actively coordinating with Vinaconex in the
implementation of detail planning for the urban area T ay Mo to
deploy in 2010 with total area of 292,15 ha along Lang – Hoa
Lac highway and right beside My Dinh National Conference Hall.
The project is now managed by the four main investors:
Vinaconex (acted as the representative), Viettel, ACB and HPG.

So far, Hoa Phat Energy JSC has commenced construction
phase 2 for Hoa Phat Coke and Thermo-electricity Plant with
designed total capacity 700,000 tons/year, power generation
station of 15MW. Total investment for both phase 1 and 2 is
approximately VND2,000 bil, in which initial investment for
phase 2 is expected VND800 bil. After completion, the Plant is
expected to reach VND3,500 bil revenue, creating jobs for
th
approximately 500 local labors. In 7 October 2009, the factory
has just produced the first batch of coke coal.

Recently, Hoa Phat Cement has given all the production
equipment of cement grinding and packing progress a trial run. It
is expected that the trial run will be operated within 2-3 weeks,
and the first Hoa Phat Cement’s batch will be launched to the
market in mid-November 2009.
Other events:
HPG has adjusted financial target for the year 2009. Accordingly, total
revenue has been revised up to VND 7,000bil and VND 920bil for earning
after tax.
th
On 28 October 2009, HPG’s management has decided to pay dividend
with rate 2:1, in which 10% by cash and 40% by issuing new share. 10%
cash dividend would be paid in Q4 2009. The remaining 40% share
dividend would be implemented in the first 6 month 2010.
Issue convertible bond with value from VND1,000 billion to VND1,600
billion to supplement working capital for HPG’s projects. Timing of the
issuance will be in 2010. Cash mobilized from the convertible bond
issuance will be supplement capital to finance Tay Mo New Urban Project
and other projects.
Financial figures
Financial Comparables as at 17 November 2009
(*)
Profit & loss (VNDm)
(*)
1H 09
2008
2007
2,115,699
3,617,014
8,364,805
5,642,934
539,069
929,872
1,258,309
966,522
Financial income
22,068
82,403
149,815
Financial expense
75,053
102,986
Net operating profit
412,251
Profit before tax
Net sales
VIS
SMC
HMC
1.590
493
424
P/E (x)
7.15
7.41
N/A
25,887
P/B (x)
4.56
1.84
1.48
170,814
45,264
Dividend yield (%)
2.36
4.75
7.92
796,097
992,443
751,421
ROA (%)
18.03
6.92
(0.42)
417,423
804,581
1,018,629
759,426
ROE (%)
59,264
127,307
164,134
122,239
EPS (VND)
358,602
686,654
859,410
643,974
2,115,699
3,617,014
8,364,805
5,642,934
Gross profit
Taxation
Profit after tax
Profit for shareholders
Balance sheet (VNDm)
(*)
Q3 09
30/09/2009
(*)
2008
2007
Cash & cash equivalent
1,233,854
601,754
510,218
399,323
Short-term investments
128,177
625,135
734,386
266,000
Current receivables
922,297
861,464
720,175
784,381
1,655,582
1,453,085
1,820,240
1,580,078
177,858
158,726
63,990
105,731
43
43
43
239,429
2,851,024
2,594,345
1,265,421
950,049
Inventories
Other current assets
Long-term receivables
Fixed asset
Goodwill
30/06/2009
424,109
513,006
-
-
Investment properties
20,640
16,209
18,331
7,207
Long-term investments
834,004
700,917
380,606
392,259
Other long-term assets
147,683
154,925
125,964
32,338
TOTAL ASSETS
8,395,272
7,679,610
5,639,375
4,756,795
Short-term liabilities
2,639,049
2,371,150
1,256,331
1,268,387
Long-term liabilities
654,789
539,435
37,768
264,977
4,879,794
4,527,420
4,111,067
3,142,551
Owners’ equity
Other funds & reserves
TOTAL RESOURCES
221,639
241,606
234,209
80,880
8,395,272
7,679,610
5,639,375
4,756,795
1H 2009
2008
2007
(12.37)
(26.59)
48.24
327.86
(3.54)
(19.03)
33.45
795.29
(*)
Ratios
Q3 2009
(*)
Growth
Sales (%)
(**)
Net profit (%)
(**)
Owner’s equity (%)
7.34
0.18
30.82
849.96
Total assets (%)
46.47
24.63
18.55
572.23
Gross profit margin (%)
16.92
14.88
15.04
17.13
Net profit margin (%)
10.78
9.80
10.27
11.41
ROE (%)
12.17
11.04
16.53
23.57
ROA (%)
18.12
15.72
23.70
37.08
Basic EPS (VND)
4,142
3,515
4,439
5,279
Current ratio (x)
1.56
1.56
3.06
2.47
Interest bearing debt/E
0.51
0.40
0.14
0.22
Total debt/equity (x)
0.67
0.67
0.31
0.49
(*)
Stock (VNDm)
: Sourced from unaudited financial statements of HPG
: Calculated upon most updated trailing 12 months figure
(**)
For more details of information regarding this stock, please log on to our Ezsearch
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Investment Analysis Department, FPT Securities JS C
Analyst: Nguyen Truong Son - Sonnt2@fpts.com.vn
Market Cap (VNDb)
81.66
26.30
(1.26)
14.820
4.550
N/A
Gross profit (%)
19.98
2.87
1.70
Net Profit (%)
13.56
1.45
(0.15)
LT debt / equity (x)
1.62
1.08
1.08
Current ratio
2.74
3.19
1.80
Source: financial information updated to the end of Q3 2009
Financial highlights
Growth:
HPG has announced impressive financial result for the
first 10 months 2009 with VND 6,486 bil revenue and
VND 1,148 bil earnings after tax. Accordingly, profit after
tax has now been exceeded 25% of the 2009 financial
target. Specifically, turnover in October 2009 is VND 664
bil and after-tax profit amount of VND100 bil. Total
revenue achieved 91% revised higher plan and it is
expected that the performance of the company in the
rest two months will fulfill the plan as stated.
In the last 3 years, HPG always outperform it’s profit with
more than 30%. The growth derives from core business
that showing strong performance through years.
Although steel price is lower by 30% by the same time
last year, revenue still increases by 55%, derived from
increase in sales.
Asset quality:
At the end of September 2009, HPG has significant
changes in asset structure. The increase from
VND5,600bil to nearly VND8,400bil mainly derives from
construction in progress (CIP) (VND1,600bil) and the
increase of
long-term
investments.
Short-term
investment VND128bil is mostly time deposit. Unlike
2008, cash & cash equivalents has increased sharply
with balance of VND1,234 bil. This amount was used to
contribute to capital employed in subsidiaries and partly
used for working capital. CIP comprises of building,
machineries and equipments for Hoa Phat Steel Plant in
Kinh Mon quarter, Hai Duong province.
HPG has taken full advantage of subsidized interest 4%
from stimulation package to expand both short-term and
long-term loans at the end of September 2009.
Accordingly, the increase of these interest bearing loans
is used to finance CIP and contribute chartered capital in
HPG’s subsidiaries and associates. Despite increase in
loans, HPG still maintains such a suitable gearing 39%
loans over total resources.
Potential cash-flow in Quarter III and IV 2009:
In the last 2 months of the year, sales of steel is
continuously expected to do well and we expect that
cash-flow from main activities would contribute a further
10% over whole year financial target. A part of cash-flow
will come from sales of coke coal.
Disclaimer
The information herein is believed by FPTS to be reliable and has been obtained from public sources believed to be reliable. However, FPTS makes no
representation as to the accuracy or completeness of such information.
Opinions, estimates and projections in this report constitute the current judgment of the author as of the d ate of this report. Investors must make their own
investment decisions using their own independent advisors.
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Head quarter
Ho Chi Minh branch
Level 2, Spring Garden building
71 Nguyen Chi Thanh street,
Ba Dinh district,
Ha Noi
Vietnam
Tel:
(84-4) 3773 7070 / 271 7171
Fax:
(84-4) 3773 9058
31 Nguyen Cong Tru
Nguyen Thai Binh ward,
District I
Ho Chi Minh city
Vietnam
Tel:
(84-8) 6290 8686
Fax:
(84-8) 6290 6070