Foreign investors sold strongly, Hoa Phat stock fell to the lowest level in 23 months

Only in the first 4 trading sessions of October, the net selling value of foreign investors on leading steel stocks has reached nearly 700 billion dong.

After a stormy September, the stock market continued to extend a series of gloomy days to early October. VN-Index fell 5% from the beginning of the week and fell to the lowest level within 20 months, leading to a series of Blue-chips stocks. also hit bottom, including HPG of Hoa Phat Group.

The leading steel stock has dropped 15% from the beginning of October to VND 18,000/share, the lowest in nearly 23 months since November 17, 2020. If compared to the peak, HPG’s market price even “evaporated” to nearly 60%, corresponding to the capitalization being blown by more than 150,000 billion VND (~ 6.4 billion USD), less than 105,000 billion VND and dropped from the top. 10 largest market capitalization on the stock exchange.

HPG stock drops to 23-month low

One of the factors that put great pressure on HPG’s stock price from the beginning of October was the net selling of foreign investors. Up to now, foreign investors have extended the chain of net selling HPG to 6 consecutive sessions. Only in the first 4 trading sessions of October, the net selling value of foreign investors on this stock has reached nearly 700 billion dong.

Foreign investors turned around and sold HPG . shares

The somewhat unexpected move quickly extinguished the only rekindled hope of the return of foreign investors in the leading steel stocks after the previous period of continuous net selling. Statistics show that foreign investors have net bought HPG consecutively in August and September with a total value of more than 1,000 billion dong. This is the period when this stock is almost moving sideways after a slight bounce from the old bottom at the end of July.

In the context of unfavorable fluctuations in the general market, HPG stock gradually “lost breath” and drifted to the previous bottom although foreign investors continued to support until the end of September. The situation got worse after Foreign investors lost patience and started selling. Since the beginning of the year, foreign investors have net sold 5,800 billion dong of HPG shares, the largest on the stock exchange. Before that, HPG was also the name that was sold the most in the market in 2021 with a value of up to VND 18,900 billion.

Despite working hard to be net sellers for a long time, foreign investors still hold a huge amount of HPG shares up to more than 1.2 billion units (20.9% rate). With the position of the leading stock in the steel industry with large capitalization, the number of outstanding and free-floating shares is among the largest on the stock exchange, it is not surprising that HPG is often in the list of most funds. foreign names in the market such as Dragon Capital group, VinaCapital group, LionGlobal Vietnam Fund and ETFs,…

Among HPG’s foreign shareholders, the most famous name is the billion-dollar fund managed by Dragon Capital, Vietnam Enterprise Investments Limited (VEIL). By the end of 2021, when the size of the fund reached nearly 2.58 billion USD, HPG was also the largest investment in VEIL’s portfolio with the proportion of 12.11%. However, this investment fell to 4th place as of September 22nd with a weight of 5.9% while the fund’s NAV has also shrunk to $1.97 billion.

According to statistics, VEIL is one of the foreign funds that sold HPG shares the most since the beginning of the year with a volume of up to 65 million units. Although not participating in the sale of goods during the period from July 21 to September 22, it is not excluded that this foreign fund has resumed net selling activities in recent sessions.

The fundamentals are no longer supported

The pressure from the escalation of the US dollar not only affects the foreign capital inflows into the Vietnamese market but also directly affects the business results of Hoa Phat. In the second quarter alone, this group lost VND 1,100 billion in exchange rate. In addition, interest rates tend to increase in order to reduce exchange rate pressure, which also has a certain effect on enterprises with a lot of debt such as Hoa Phat, especially in the context that Dung Quat 2 project has entered the necessary investment stage. huge capital.

Besides, one of the reasons why HPG was constantly being sold strongly could come from the fact that the basic factors no longer supported Hoa Phat as in the previous period. Specifically, after peaking in the third quarter of 2021 – a period when steel prices also continuously escalated to unprecedented heights, Hoa Phat’s profit began to level off and go down.

After consecutive declines, the world rebar price is now only 1/3 of the peak. Hoa Phat’s construction steel price in the domestic market has increased in recent weeks but the potential for price increase in the remaining months of the year may be modest. The trickle price increase of only 100-200 VND/kg each time of Hoa Phat partly shows that the demand of final consumers is still growing slowly.

SSI Research believes that Hoa Phat’s profit in the coming quarters will likely continue to decline over the same period. The reason comes from the domestic demand for steel which is forecasted to be negatively affected by inflation pressure and the tight control of the real estate market. Consumption of HRC will also be challenged as galvanized sheet producers are reducing their inventory balance amid falling prices and slowing demand in both domestic and export channels.

Meanwhile, VDSC believes that raw material prices may fall further in the fourth quarter of this year. In such a context, VDSC assesses that Hoa Phat Group’s crude steel production cost will be only slightly lower in the third quarter than in the second quarter and then will decrease further in the fourth quarter when HPG has actively limited stockpiling raw materials and cutting production in July-August. Thus, a large part of steel sold in Q3 can be produced from high-priced raw materials.

Ha Linh/Market Lifestyle