Steel giant Hoa Sen targets after-tax profit of $20.3 mln in 2023-2024 fiscal year

Multi-sector group Hoa Sen is targeting VND400-500 billion ($20.3 million) in after-tax profit in the 2023-2024 fiscal year, significantly higher than the VND30 billion recorded the previous year.

In its plan to be submitted at its upcoming annual general shareholder meeting, the group also aims to earn VND34-36 trillion ($1.46 billion) in revenue this fiscal year (October 1, 2023 - September 30, 2024), up 7.5-14% year-on-year.

Hoa Sen is involved in the distribution of construction materials (Hoa Sen Home), plastic production and trading (Hoa Sen Plastic), production and trading of steel sheets (seven wholly-owned subsidiaries and one affiliated factory), real estate, and port operations.

From 2022-2023, the company restructured its plastic and retail segments. Hoa Sen Plastic JSC, after being restructured, has been operating efficiently, showing high proactiveness in governance, it said. In the future, Hoa Sen Plastic will make an initial public offering (IPO) and list on the stock market.

The group will continue to restructure its steel pipe segment. Accordingly, Hoa Sen Phu My Company Limited will be converted into Hoa Sen Steel Pipe Joint Stock Company, taking over all facilities serving steel pipe production and business. After the company is operating stably and earning a profit, the board of directors will develop a plan for an IPO and stock market listing. The restructuring is expected to take 1-5 years.

In the 2022-2023 fiscal year (October 1, 2022 - September 30, 2023), the group reported a revenue and after-tax profit drop of 36% and 88% to VND31.65 trillion ($1.29 billion) and VND30 billion ($1.22 million) respectively, failing to fulfill its yearly business targets.

It attributed the results to complicated developments in the world steel market, with plunging demand in most countries and regions due to reduced construction activity and infrastructure investment, rising inflation and energy costs, and escalating political conflicts. In addition, China boosted steel exports at a rapid pace, causing global steel prices to fall.

Domestically, the real estate market has faced numerous difficulties and construction activities have been stagnant, causing steel demand to drop. As a result, businesses in the industry have continuously reduced prices to survive.

With these results, the Hoa Sen board of directors proposed to pay cash dividends at a rate of 5% for the 2022-2023 fiscal year, higher than the 3% payout the previous year.

A bright spot in the last fiscal year was the group had no long-term debt, while short-term debt decreased sharply from VND4.07 trillion to VND2.94 trillion ($119.4 million). Total debt dropped by VND1.25 trillion ($50.76 million).

Amid difficulties, Hoa Sen took advantage of free trade agreements to expand its export markets. Currently, its products are exported to more than 87 countries and territories.

In the retail segment, Hoa Sen has opened 114 Hoa Sen Home stores nationwide and plans to expand the network.

Entering the 2023-2024 fiscal year, Hoa Sen's business situation has recovered significantly. Its revenue in the first quarter (from September to December 2023) reached VND9.07 trillion ($368.33 million), up 14% year-on-year and the highest level in the last six quarters.

Its after-tax profit hit VND103 billion ($4.18 million), compared to a loss of VND680 billion in the same period the previous fiscal year.

Hoa Sen, listed on the Ho Chi Minh Stock Exchange (HoSE) as HSG, closed the Wednesday session at VND22,900 ($0.93) per share.