Vietnam steel companies’ 2024 profits to recover from low bases

By Kha Moc, Minh Hue
Tue, February 6, 2024 | 8:21 pm GMT+7

Most listed Vietnamese steel businesses reported year-on-year declines in net revenue and net profit last year, but their profits are expected to grow well in 2024.

According to the Vietnam Steel Association (VSA), domestic crude steel production in 2023 reached nearly 19.2 million tons, down 4% compared to 2022. Crude steel consumption was nearly 18.8 million tons, up slightly 1% year-on-year, while nearly 1.8 million tons of crude steel were exported, 1.4 times more than in 2022.

 Hoa Phat Group's workers complete steel products. Photo courtesy of the company.

Hoa Phat Group's workers complete steel products. Photo courtesy of the company.

Finished steel production hit 27.76 million tons, dropping 5% year-on-year, and finished steel sales reached nearly 26.3 million tons, down 3.5%, of which exports were more than 8 million tons, an increase of 29%.

The figures showed that Vietnam's steel market in 2023 was quiet, with businesses narrowing production due to falling global steel demand, economic recession and high inflation in major steel markets such as the EU and the U.S.

In that context, most steel producers recorded declines in net revenue or net profit in 2023 compared to the previous year. For example, giant Hoa Phat, listed on the Ho Chi Minh Stock Exchange (HoSE) as HPG, saw a 15.88% drop in net revenue, Nam Kim Steel Corporation (HoSE: NKG) 19.39%, and Thai Nguyen Iron and Steel Joint Stock Corporation (UPCoM: TIS) 18.54%. Only TLH reported a year-on-year revenue increase of 17.63% to VND6.2 trillion ($254.36 million).

Similarly, the 2023 net profits of businesses in the group also decreased, such as TIS with a loss of VND179 billion ($7.35 million), nearly 20 times higher than 2022; Pomina (HoSE: POM) with VND961 billion ($39.4 million), and SMC Trading Investment Joint Stock Company (HoSE: SMC) VND919.3 billion.

NKG was a bright spot with a net profit of VND114.7 billion ($4.7 million) from a VND124.7 billion loss in 2022. Nha Be Steel Joint Stock Company (UPCoM: TNB) also attracted attention with VND2.9 billion ($119,000) in profit compared to a loss of VND8.4 billion the previous year. Vnsteel - Vicasa Joint Stock Company (HoSE: VCA) also switched from a loss of VND5.9 billion in 2022 to a profit of more than VND7.1 billion in 2023.

In Q4/2023, the steel group marked a comeback when many companies reporting profits compared to heavy losses in 2022.

Typically, HPG recorded Q4 revenue increasing by 33.14% year-on-year to VND34.93 trillion ($1.43 billion). Its after-tax profit hit VND2.97 trillion ($121.87 million) from a loss of nearly VND2 trillion in the same period in 2022. Compared to the previous quarter, HPG's profit surged 48%.

For Hoa Sen Group (HoSE: HSG), its consolidated revenue in Q1of the 2023-2024 fiscal year (October 1, 2023 to December 31, 2023) reached VND9.7 trillion ($398 million), a year-on-year rise of 15%. The firm’s gross profit margin recovered strongly from 2% in Q1 of the 2022-2023 fiscal year to 11% in the same quarter of the 2023-2024 fiscal year.

As a result, its gross profit in Q1 of the 2023-2024 fiscal year reached VND960 billion ($39.4 million), five times higher than the same period the previous fiscal year. HSG reported a profit of VND22.4 billion ($919,160) compared to a loss of VND414.3 billion in Q4/2022.

Similarly, NKG posted Q4/2023 net revenue of VND4.46 trillion ($183 million), up over 3.7% year-on-year. With its gross profit margin in Q4/2023 reaching 6.12% (-4.9% in Q4/2022), NKG’s gross profit recorded a strong recovery, reaching VND273.2 billion ($11.2 million) compared to a gross loss of nearly VND210 billion in the same period in 2022.

NKG’s financial and business governance costs were VND88.5 billion ($3.63 million) and VND22.8 billion, down 12.1% and 49%, respectively. Meanwhile, its sales expenses were more than VND175.3 billion ($7.2 million), a year-on-year rise of 15%. Therefore, in Q4/2023, the company had a net profit of VND22.4 billion, sharply increasing from a loss of VND414.3 billion in Q4/2022.

On the contrary, POM, SMC and TLH continued to report losses.

Bright outlook in 2024

Broker ACB Securities (ACBS) expected steel consumption in 2024 to recover thanks to continued strong public investment. Disbursement of state budget investment capital in 2023 reached VND625.3 trillion ($25.66 billion), expanding VND21.2 trillion over the previous year and fulfilling 85.3% of the yearly plan.

With the economic situation yet positive, ACBS forecasts that the state will continue to promote public investment disbursement to spur economic growth.

Some large projects such as Long Thanh airport in the southern province of Dong Nai (with investment capital of $16 billion), which has a higher steel demand than other public investment projects, will be a growth driver for the steel industry.

In addition, the real estate market, the main consumer of steel products, is predicted to recover, it said, adding real estate supply is expected to improve in the following years, helping steel demand recover.

Another broker BIDV Securities (BSC) estimated that with positive changes in policies and low interest rates, the real estate market will recover from the second half of 2024, while domestic steel production will increase by 10-15% compared to 2023.

The gross profit margin of steel enterprises in 2024 is expected to recover to the average level of a cycle thanks to the recovery in output and an upward trend in steel prices.

“Now is a good time to buy stocks in steel businesses with good assets and large market shares, as the worst time for steel firms has passed and their profits are at the bottom and will gradually improve in the near future,” BSC noted.

Comments (0)
  • Read More
AI cannot replace customer service staff: MoMo exec

AI cannot replace customer service staff: MoMo exec

AI cannot replace customer service staff, but it can give them more time to prepare and provide better care for customers, says Thai Tri Hung, senior deputy general director and chief technology officer of e-wallet app MoMo.

Companies - Thu, October 31, 2024 | 8:11 am GMT+7

Vietnam property developer Novaland posts skyrocketing Q3 profit

Vietnam property developer Novaland posts skyrocketing Q3 profit

Novaland, a leading real estate developer in Vietnam, reported its after-tax profit hit VND2.95 trillion ($166.62 million) in the third quarter of this year, a 21.6-fold rise year-on-year.

Companies - Wed, October 30, 2024 | 10:59 pm GMT+7

Thailand fruit prices increase at the end of successful season

Thailand fruit prices increase at the end of successful season

Thailand’s fruit season is wrapping up this year with a notable surge in prices for durian, mangosteen, rambutan, longkong, and mango.

Southeast Asia - Wed, October 30, 2024 | 10:30 pm GMT+7

BlackBerry launches regional cybersecurity headquarters in Malaysia

BlackBerry launches regional cybersecurity headquarters in Malaysia

Canada-based BlackBerry Ltd has established an Asia Pacific regional headquarters for its cybersecurity division in Cyberjaya, Malaysia, which is now fully operational.

Southeast Asia - Wed, October 30, 2024 | 10:27 pm GMT+7

Malaysia faces rising cybersecurity threats

Malaysia faces rising cybersecurity threats

Malaysian users are facing a high level of cyber threats, which may coincide with the rapid expansion of data centers in the country.

Southeast Asia - Wed, October 30, 2024 | 10:24 pm GMT+7

Indonesia to develop 3 million more hectares of rice fields

Indonesia to develop 3 million more hectares of rice fields

The Indonesian government is working to implement a program to develop 3 million hectares of new rice fields to strengthen the country's food resilience amid global challenges and increasing population demands, national news agency Antara reported.

Southeast Asia - Wed, October 30, 2024 | 9:24 pm GMT+7

Singapore’s digital economy thriving

Singapore’s digital economy thriving

Singapore’s digital economy accounted for 17.7% of the island state's GDP in 2023, up from 17.3% in the previous year, according to its Infocomm Media Development Authority (IMDA).

Southeast Asia - Wed, October 30, 2024 | 9:21 pm GMT+7

Viettel, UAE’s Presight to boost Applied AI, digital transformation in Vietnam

Viettel, UAE’s Presight to boost Applied AI, digital transformation in Vietnam

Vietnam’s Viettel AI and the UAE’s Presight have agreed to jointly advance the development of Applied AI and digital transformation initiatives in Vietnam.

Companies - Wed, October 30, 2024 | 8:30 pm GMT+7

Vietnam utility EVN to build $277 mln transmission line to import power from China

Vietnam utility EVN to build $277 mln transmission line to import power from China

State utility Vietnam Electricity (EVN) has got the go head to build the VND7,010 billion ($277.2 million), 500 kV Lao Cai-Vinh Yen line for transmission in the northwestern region and to import power from China.

Energy - Wed, October 30, 2024 | 8:09 pm GMT+7

Jack Ma-invested fund unloads Vietnam holdings worth $130 mln in Q3

Jack Ma-invested fund unloads Vietnam holdings worth $130 mln in Q3

China’s Tianhong Vietnam Market Stock Initiated Securities Investment Fund (QDII) saw outflows of around RMB930 million ($130.4 million) in the July-September quarter.

Finance - Wed, October 30, 2024 | 4:53 pm GMT+7

Private lender HDBank reports strong profit growth in 9 months

Private lender HDBank reports strong profit growth in 9 months

Ho Chi Minh City-based private creditor HDBank's pre-tax profit surged 47% year-on-year to VND12.65 trillion ($499.6 million) in the first nine months of this year.

Banking - Wed, October 30, 2024 | 4:42 pm GMT+7

Real estate M&As gather pace as local firms struggle with capital insufficiency, restructuring: experts

Real estate M&As gather pace as local firms struggle with capital insufficiency, restructuring: experts

2024 is considered a vibrant year for mergers and acquisitions (M&A) in Vietnam’s real estate sector, as domestic property companies still face challenges related to capital and restructuring, according to experts.

Real Estate - Wed, October 30, 2024 | 4:14 pm GMT+7

Vietnam conglomerate Vingroup, UAE partner seek to build $3.5 bln data center

Vietnam conglomerate Vingroup, UAE partner seek to build $3.5 bln data center

Vietnam’s leading conglomerate Vingroup and the Middle East-focused Benya Technologies will jointly explore opportunities to invest in a $3.5 billion data center in Vietnam.

Industries - Wed, October 30, 2024 | 3:43 pm GMT+7

Commonwealth Bank of Australia further sells 10% stake in Vietnam bank VIB

Commonwealth Bank of Australia further sells 10% stake in Vietnam bank VIB

The Commonwealth Bank of Australia (CBA) has sold a further 10% stake in Vietnam International Commercial Joint Stock Bank (VIB).

Banking - Wed, October 30, 2024 | 1:17 pm GMT+7

Saudi Aramco seeks to invest in Vietnam, partner with Petrovietnam

Saudi Aramco seeks to invest in Vietnam, partner with Petrovietnam

State-owned Saudi Arabian Oil Group (Aramco), the world’s largest oil producer, is eyeing to invest in petrochemical-oil refining and petroleum distribution in Vietnam, said president and CEO Amin Hassan Nasser.

Energy - Wed, October 30, 2024 | 11:01 am GMT+7

Emirates seeks to expand presence in Vietnam

Emirates seeks to expand presence in Vietnam

Emirates, the flagship carrier of the UAE, has signed two separate memorandums of understanding (MoUs) with Vietnam Airlines and Vietjet as part of the airline's efforts to expand its footprint in Vietnam.

Companies - Wed, October 30, 2024 | 10:02 am GMT+7