Hoa Phat plans to release a profit plan of VND 9,000 – 10,000 billion in 2020

In the afternoon of May, 15th 2020 in Hanoi, Hoa Phat Group held a meeting with representatives of domestic and aboard securities and fund management companies, hosted by Chairman Tran Dinh Long. The most remarkable information given by the Group's leader is that Hoa Phat is expected to release plans for 2020 with revenue ranging from VND 85,000 to VND95,000 billion and after-tax profit of about VND 9,000 to VND 10,000 billion in the General Meeting of Shareholders.

Revenue is expected to increase by 30%

At the meeting, Chairman of Hoa Phat said: "Hoa Phat plans to release a profit plan of VND 9,000– 10,000 billion for 2020".

Mr. Tran Dinh Long shared, due to the Covid-19 pandemic in this year, the General Meeting of Shareholders was postponed, like most of the other large listed enterprises. Accordingly, Hoa Phat decided to hold the General Meeting of Shareholders in 2020 on June 25, 2020 in Hanoi. It is expected that the Board of Directors will come up with the business plan and announce to the General Meeting of Business plans with revenue ranging from VND 85,000 to 95,000 billion, and profit after tax from 9,000 to 10,000 billion VND.
Regarding dividends, Mr. Long said that it is expected to propose the dividend rate of 20% in stock and 5% in cash in the General Meeting of Shareholders 2019. This 5% ratio in cash is a great effort of Hoa Phat during the investment period. "The 5% is not seen as a small number, which is a very large number at the present if compared to hundreds of companies. Since 2020 Hoa Phat has begun to reduce investment and has paid dividend in cash again" Mr. Long shared.
In the field of steel business, HPG leaders shared that until 2021, when 4 blast furnaces of Dung Quat project synchronously come into operation, Hoa Phat will reach a crude steel capacity of 8 million tons / year and become the largest steel enterprise in Vietnam, not Formosa. Currently, Hoa Phat's steel market share has reached 31,4%, leading the country as long as sales volume leading the southern market.
Answering questions of investment funds about the debt ratio, Ms. Pham Thi Kim Oanh - Finance Director of the Group said that it is expected that by the end of 2020, Hoa Phat's debt will be up to about VND 46,000 billion including an increase of VND 22,000 billion in long- term debt and VND 3,000 billion short-term debt but the amount of cash will increase respectively. Therefore, the net debt of Hoa Phat (debt minus cash) to the end of the year also revolves around VND 35,000 billion as at the present time, ensuring safe financial health.

The steel sector has additional advantages from public investment policy after the pandemic
Assessing the impact of Covid-19, Chairman Long believed that the steel industry is less affected, after the economic lockdown, there will be a lot of public investment in post- reconstruction. Vietnam's public investment package of VND 700,000 billion mainly disburses into bridges and roads so the steel consumption will be relatively good. But the real situations depend on the evolution of the disease in the future. "2020 growth of steel consumption will be positive, not negative," Mr. Long said.
Commenting on the export of billets to China, Mr. Tran Dinh Long said: “This is a huge competition test because China is a powerful steel manufacturer. Exported to China is the best answer for the competitiveness of Hoa Phat Steel. Hoa Phat produces billets at world prices and even though the profits are not equal to finished construction steel. Hoa Phat will diversify the market rather than put all our eggs in one basket and are exporting billets to many other Southeast Asian countries ”. The Chinese import Hoa Phat steel billet is also a part in the policy of stimulating growth and consumption of this country after the epidemic.
"The important thing is competitive price, which is the root of the problem. The shorter the stage is, the lower the margin is, but I confirm that the billet export is profitable based on the market price, although it is not as high as finished products, they are exported to China. However, we assert that Hoa Phat's main market is domestic, not export, ”Mr. Tran Dinh Long said.
In 2020, Hoa Phat plans to 3,6 million tons of steel, 800,000 tons of billet, 500,000 tons of HRC (starting to run from September). Production of corrugated iron companies in 2020 will be 120,000 tons. Steel pipe products set a similar plan to the output of 2019.

HRC: It is expected to start providing products to market in September
Regarding the progress of HRC production, according to Mr. Long, it will depend on foreign experts who transfer technology and guide the operation. The Government has overcome this problem and now it depends on other the countries.
However, Hoa Phat tried to put into trial operation in August and is expected to start producing from September and HRC output this year will be about 500,000 tons. Chairman of Hoa Phat said that before 2025, Vietnam will still have to import more HRC because the production capacity of Hoa Phat and Formosa is not enough.
According to HRC manufacturers, the HRC production line is 10 times harder than construction steel production technology. Therefore, the aforementioned HRC production plan depends on many factors. That is why Hoa Phat plans to release a profit plan of about VND 9,000 -10,000 billion this year.

In June 2020, the port in Dung Quat will welcome the first 200,000 tons ship
The construction progress has already reached over 95%, the most difficult part is that the basic part of reef has solved. It is expected that in June, Hoa Phat Dung Quat Port will welcome the first 200,000 tons ship. The bigger the ship is, the cheaper the freight is, so Hoa Phat can buy straight ore from Brazil, South Africa, Australia without going through the common ports, the cost will be cheaper.
According to Mr. Long, the construction of a deep-sea port is completely new to Hoa Phat and "too difficult to do, but the results are very rewarding". That is an advantage when importing coal and ores by big ship then dividing for Dung Quat or Hai Duong. Vietnam has of the deep port which is a unique advantage. In 2021, when 4 blast furnaces of Hoa Phat Dung Quat Integrated Complex come into operation stably, Hoa Phat's reach 8 million tons of crude steel / year. At that time, Hoa Phat needs to import 12-13 million tons of ore, due to the advantage of seaports, Hoa Phat would save more and more cost and increase competition.

Estimated profit from agriculture is VND 1,200 billion by 2020

In agriculture, the Group's leader shared that agricultural there will be VND 10,000 billion revenue and VND 1,200 billion profit after tax for 2020, the second largest sector after steel. After 5 years of carefully and steadily investing in agriculture, all farms are developing well, the level of production management is strongly improved. Hoa Phat's Australian beef is holding the number 1 market share after nearly 5 years of investment with more than 50%, poultry eggs are also in the Top list with more than 400,000 eggs/ day. This year, Hoa Phat plans to supply 150,000 Australian cows and 200,000 commercial pigs (excluding piglets and weaned pigs) to the market and reach an output of 700,000 eggs per day by the end of 2020. Talking more about the agriculture in the first quarter, Mr. Long said, the profit of this field has reached nearly VND 500 billion, but cannot multiply 4 results of the first quarter for the whole year because the market may have many changes, especially the government is regulating the price of pork in a downward direction.

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