Hoa Phat is profitable again after 2 quarters of heavy losses, a series of securities companies fell into the “offside” position.

Hoa Phat’s business results helped steel industry shareholders temporarily “breathe” but accidentally caused a series of securities companies to fall into an “offside” position because of the previous somewhat pessimistic forecasts.

True to the statement that “the most difficult period of the steel industry is over” of Chairman Tran Dinh Long at the annual General Meeting of Shareholders held at the end of March, Hoa Phat Group (HPG) was profitable again in the first quarter of this year. 2023 after 2 consecutive quarters of heavy losses.

In the first quarter of the year, Hoa Phat recorded revenue of VND 26,865 billion, down 39% over the same period. Consolidated profit after tax reached VND 383 billion, down more than 95% over the same period but much better than the loss of trillions of billion in the previous 2 quarters. The field of steel production and related products is still the mainstay and contributes 94% of the group’s profit after tax.

Hoa Phat’s business results helped steel industry shareholders temporarily “breathe” but accidentally caused a series of securities companies to fall into an “offside” position because of the previous somewhat pessimistic forecasts.

In the previous report, KBSV forecast that Hoa Phat’s first-quarter revenue would decrease by 44% year-on-year to VND24,588 billion. Profit margin is low, reaching 3% compared to 23% in the same period. This securities company forecasts that the leading steel company cannot escape losses with the forecasted profit after tax in the first quarter of 2023 is negative 130 billion dong, down 102% over the same period.

Similarly, with weak demand, VNDirect is concerned about Hoa Phat’s ability to transfer the risk of increasing input material prices to the end consumer. Besides, low factory operating efficiency in the first half of 2023 will also affect the company’s profit margin. This securities company estimates Hoa Phat’s EBITDA margin in the first quarter of 2023 is 1.8 percentage points lower than the previous quarter and forecasts that net profit may still be negative in the first quarter of the year.

Latest, according to the report of business results in the first quarter of 2023 of 32 enterprises, SSI Research has forecast that Hoa Phat may record a loss in the first quarter of the year due to the continued decrease in operating capacity in the context of demand. weak. However, this securities company also believes that the loss may be less than the loss of the previous 2 quarters thanks to the recovery of steel prices.

The hardest may be over but the challenge still remains

It is likely that Hoa Phat’s profit improved in Q1 partly from the recovering trend of steel prices in the first 3 months of the year. According to data from tradingeconomics, the price of rebar in the Chinese market in mid-March climbed to a nine-month high. Compared to the 2-year low at the end of October last year, the price of this commodity has increased by nearly 26%.

Along the same trend, construction steel prices in the domestic market also increased sharply in the first 3 months of the year. Prices of some steel grades of Hoa Phat also increased by the end of March by about 1.5-2 million VND/ton. The Vietnam Steel Association (VSA) said that steel prices continued to increase in the first quarter mainly due to the increase in import prices of input materials for steel production such as coal, iron ore, scrap steel, hot rolled coil, etc. High.

However, steel prices then showed signs of reversal and began to decline sharply from the beginning of April until now. The price of rebar in China has fallen to the lowest level since mid-November last year while the price of some domestic steel has also decreased by up to 1 million dong/ton in about 3 weeks.

In addition to the reversal of steel prices, weak demand is also a headache for steel producers. In the first quarter of 2023, Hoa Phat produced 1.2 million tons of crude steel, down 42% over the same period. Sales volume of construction steel, billet and HRC reached 1.37 million tons, also down 37% over the same period. Weak demand will affect the group’s plan to reopen blast furnaces in the near future, which is expected to restart 1 furnace in early April and 2 furnaces in May.

According to some comments, the steel industry can grow positively from the third quarter thanks to the following factors: steel consumption volume increased again; gross profit margin improved on lower input material prices and a lower forecast for inventory depreciation; exchange rate losses fell sharply. However, Hoa Phat still has a very cautious business plan with a target of net profit of VND 8,000 billion, down 5.3% compared to last year.

Ha Linh/Market Lifestyle