SSI Research estimates Hoa Sen's profit to increase sharply in fiscal year 2023 - 2024
Hoa Sen Group Joint Stock Company (code HSG - HoSE floor) is forecast to record a profit of VND 775 billion in the 2023 - 2024 fiscal year, a sharp increase over the same period.
SSI Research forecasts that in the 2023-2024 fiscal year, Hoa Sen Group will record a profit of VND775 billion, an increase of 24.8 times over the same period. Of which, the expected consumption output will increase by 14.6% over the same period, to 1.6 million tons, assuming that export and domestic output are expected to increase by 16%, to 891,000 tons and increase by 13%, to 711,000 tons, respectively.
Explaining the growth forecast, this analysis unit said it was thanks to the expectation of demand from developed markets from pre-signed export contracts in the context of the HRC price gap in the US and Europe compared to Vietnam widening in the last months of 2023.
It is known that in the 2022 - 2023 fiscal year (from October 1, 2022 to September 30, 2023), Hoa Sen Group recorded revenue of VND 31,650.7 billion, down 36.3% over the same period and profit after tax recorded VND 30.06 billion, down 88% over the same period. In which, gross profit margin decreased from 9.9% to only 9.7%.
Hoa Sen increases debt as it increases inventory accumulation in the first quarter of fiscal year 2023-2024
In terms of business activities, in the first quarter of the 2023-2024 fiscal year (from October 1 to December 31, 2023), Hoa Sen Group recorded revenue of VND 9,073.22 billion, an increase of 14.6% over the same period, and recorded a profit of VND 103.36 billion compared to a loss of VND 680.23 billion in the same period, an increase of VND 783.59 billion. In which, the gross profit margin improved from 2% to 10.5%.
During the period, gross profit increased by 493.7% over the same period, equivalent to an increase of VND 789.72 billion, to VND 949.69 billion; financial revenue increased by 36.5%, equivalent to an increase of VND 11.71 billion, to VND 43.76 billion; financial expenses decreased by 56.4%, equivalent to a decrease of VND 64.05 billion, to VND 49.55 billion; sales and administrative expenses increased by 9.3%, equivalent to an increase of VND 71.3 billion, to VND 839.26 billion, and other activities fluctuated insignificantly.
Thus, in the first quarter of the 2023-2024 fiscal year, Hoa Sen Group recorded profits again, mainly due to positive revenue growth, while gross profit margin improved sharply, leading to strong profit growth.
Contrary to the improved profit picture, in the first quarter of the 2023-2024 fiscal year, Hoa Sen Group recorded negative operating revenue of VND 672.9 billion compared to a positive VND 1,853.8 billion in the same period. In addition, investment cash flow was positive VND 13.5 billion and financial cash flow was positive VND 1,748.1 billion, mainly due to increased debt to offset the cash flow deficit.
In terms of asset size, as of December 31, 2023, Hoa Sen Group's total assets increased by 8.3% compared to the beginning of the period, equivalent to an increase of VND 1,433.1 billion, to VND 18,798.4 billion. Of which, the main assets in inventory were recorded at VND 8,025.3 billion, accounting for 42.7% of total assets; fixed assets were recorded at VND 4,763.8 billion, accounting for 25.3% of total assets; short-term receivables were recorded at VND 2,415.1 billion, accounting for 12.9% of total assets; cash and short-term financial investments were recorded at VND 1,709.7 billion, accounting for 9.1% of total assets, etc.
During the period, inventories increased by 5.2% compared to the beginning of the period, equivalent to an increase of VND 396.7 billion, to VND 8,025.3 billion; cash and short-term financial investments increased by 174.4% compared to the beginning of the period, equivalent to an increase of VND 1,086.6 billion, to VND 1,709.7 billion...
Regarding capital, at the end of the first quarter of the 2023-2024 fiscal year, Hoa Sen Group's total short-term debt increased by 59.5% compared to the beginning of the period, equivalent to an increase of VND 1,748.1 billion, to VND 4,684.4 billion and accounting for 24.9% of total capital (at the beginning of the period, it recorded VND 2,936.3 billion and accounted for 16.9% of total capital).
Hoa Sen plans to IPO its subsidiary
Another noteworthy point is that Hoa Sen Group has just announced its Annual Report for the fiscal year 2022 - 2023. Although it did not announce the financial plan for the new fiscal year, the Company did share its development strategy.
In particular, regarding the investment plan, in the 2023 - 2024 fiscal year, Hoa Sen Group said that for the plastic production and business sector, the Company will continue to consolidate and improve the operational efficiency of Hoa Sen Plastic Joint Stock Company, gradually implementing the initial public offering (IPO) when sufficient resources and market conditions are prepared, expected to be in the period from 2024 to 2026.
It is known that as of September 30, 2023, Hoa Sen Group owns 99.95% of capital at Hoa Sen Plastic Joint Stock Company, a unit operating in the field of manufacturing and trading plastic construction materials.
For the construction materials and interior distribution business, the Company continues to consolidate and improve the business efficiency of the Hoa Sen Home system, prepare sufficient resources to establish Hoa Sen Construction Materials - Interior Distribution Joint Stock Company, and at the same time plan to transfer the construction materials - interior distribution business to Hoa Sen Home Joint Stock Company at a suitable time, expected from 2024 to 2026.
It is known that after 2 years since its establishment, Hoa Sen Home chain now has 114 stores in 3 regions of the country.
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