Hoa Phat eyes VNĐ100 trillion revenue by 2020

Hoa Phat Group on March 10^th 2017 successfully organised its annual shareholder meeting 2017 tittled “New stature – new strength”. The meeting agreed to vote board of directors in the 2017-21 period with 9 members; approving the business plans for 2017; submitting to the board of directors on appropriate funds, dividend payment plan 2016 and estimates for 2017; the Hoa Phat Dung Quat Integrated Steel Complex project, amending of the company’s charter etc. The shareholders were confident and optimistic about the targets of the board of directors to raise the stature and strength of the group with the revenue up to VND100 trillion (US$4.5 billion) by 2020.

Hòa Phát Group (HPG) said it expected to earn more than VNĐ100 trillion (US$4.5 billion) in revenue by 2020, the year Hòa Phát Dung Quat iron and steel production complex would become fully operational.

Earning this amount of revenue will mean HPG contributes some VNĐ10 trillion ($440 million) to the State budget.

The Hoa Phat Dung Quat Integrated Steel complex, based in the central province of Quang Ngai, is expected to cost VNĐ52 trillion ($2.2 billion) and have an annual capacity of 4.5 million tonnes.

The project will use state-of-the-art technologies provided by the Netherlands, Italy and Germany.

HPG plans to allocate 30 per cent of the project’s investment capital to environmental components. Once completed, the project is expected to lift the group to among the world’s top 50 steel producers.

In 2017, the group earned VNĐ46.8 trillion ($2.05 billion), up 38 per cent from 2016, and hit a record post-tax profit of VNĐ8 trillion ($351 million), surpassing its target by 33 per cent, up 21 per cent year on year.

Over the past 10 years, subsidiaries of HPG have contributed more than VNĐ20 trillion ($878 million) to the State budget, equivalent to the amount generated by the central province of Quang Nam, one of the nation’s top 10 contributing provinces.

The Hoa Phat Group’s shareholder meeting was attended by 204 shareholders who represent for more than 76 per cent of voting shares

Tran Tuan Duong, Hoa Phat Group’s general director said the group reached a revenue of VND33.9 trillion and after-tax profit of VND6.6 trillion in 2016 thank to efforts of all managers and staffs. These figures represent 34 per cent and 89 per cent increases from 2015 in terms of revenue and after-tax profit respectively.

Hoa Phat contributed VND3.4 trillion to the State budget in 2016, increasing 24 per cent from 2015 and listed in the top of 30 biggest tax payers in Viet Nam.

Steel products continue to confirm its key business of the group, contributing 80 per cent to its total revenue and profit in 2016. Its construction steel output reach 1.8 million tonnes, accounting for 22.2 per cent of the country’s market shares while its steel pipe consumption made up 26 per cent of market shares, continuing its leading position in the market. Other industrial production sectors and real estate of Hoa Phat Group maintained their stable growth rate of average 10 per cent. Its agriculture sector started to have profit in 2016 though it is a new sector of the group and facing with difficulties.

Shareholders at the meeting highly valued successes of the board of directors, managing board and 14,000 staffs for their efforts in 2016.

In addition, shareholders also raised some questions about the plans of VND40 trillion revenue and VND6 trillion after-tax profit in 2017; the capital mobilisation for the Hoa Phat Dung Quat Integrated Steel Complex in the central Quang Ngai Province; the progress of the coated steel project in northern Hung Yen Province; issuing share plan for current shareholders to increase charter capital and projects in agriculture and property sectors.

Tran Dinh Long, chairman of Hoa Phat’s board of directors answered questions from shareholders

The group said the plan to increase profit from VND5 trillion to VND6 trillion in 2017 was based on careful calculations and the optimistic market reality in the first months of the year. Hoa Phat’s profit in the first two months of the year was over VND1.2 trillion and expected to reach VND1.8 trillion in the first quarter of this year. Shareholders were surprised and happy with the impressive figures.

Hoa Phat believes that the group would continue to maintain its leading position for construction steel and steel pipe by 2020, accounting for 25-30 per cent of the country’s market shares, top 5 biggest coated steel producers and top 10 animal feed companies.

In the agricultural sector, Hoa Phat has two breeding plants in Hung Yen and Dong Nai Provinces with total capacity of 600,000 tonnes per year. It is building the third plant in Phu Tho Province with capacity of 300,000 tonnes per year. It targets to reach the capacity of 1 million tonnes of animal feed, 650,000 pigs, 75,000 hi-tech beefs and 300 million clean eggs a year in the next five years.

In the real estate sector, most of revenue from the Mandarin Garden 2 would be yielded in 2017. Hoa Phat started construction of Bac Pho Noi Urban Area with total area of 260 hectares while expanding its current industrial zones in Hung Yen and Ha Nam Provinces.

Long shared details of the target to create new strength and new stature of Hoa Phat Group to shareholders with a revenue of VND100 trillion by 2020, triple than that of 2016. The plan is feasible after completing the second phase of the Hoa Phat Dung Quat Integrated Steel Complex with capacity of 4 million tonnes of steel a year, mainly construction steel, high quality rolled steel and hot rolled steel.

Shareholders at the meeting highly valued successes of Hoa Phat Group in the past few years as well as outlook for its big projects in the upcoming time

The project has many advantages as it is in the general planning of the economic zone with deep sea port which will be convenient for transport of material and products from the north to the south. After completion, visitors could only see ore input transported from ships to production and completed steel products produced by modern blast furnace technology.

The closed production line helps Hoa Phat maximum reduce costs and having no discharge to the environment. Mr Long affirms that the environment has been the top priority for the group. They use 20-30 per cent of their spending on the project to ensure environment protection to protect benefits of the group, surrounding people and the community.

Mr Long said the group planned to issue 250 million shares to its current shareholders to increase charter capital at the rate of 5:1 (each shareholder who own 5 shares could buy a new share). The capital of VND40 trillion would be invested to the second phase of the Dung Quat Hoa Phat Integrated Steel Complex.

Mr Long said the project is divided into two phases with total investment of VND40 trillion. It would need VND20 trillion for the first phase of the project. The group has VND10 trillion of the equity capital while the remaining was committed to lend from Vietinbank.

“"The issuing shares was not because of lack of money for the first phase," Mr Long said.

However, in order to seize the opportunity, Hoa Phat does not wait to complete the first phase to do the second phase. The company issues shares, preparing sufficient counterpart funds for the phase 2. This is a way to maintain the financial strength of business itself and sustainable development and also the opportunity for all shareholders to buy shares at good prices.

Hoa Phat Group will celebrate 25^th year of development in 2017. Many big plans and projects in all main activities, especially steel sector have been implementing to quickly complete the revenue target of VND100 trillion by 2020. This would be a “flash” progress of Hoa Phat Group in the upcoming time, creating new stature and strength for the group to equal to big firms in the region while increasing benefits for its shareholders and the community.

                                                                                        Cam Tu – Nghi Tran