Hoa Phat targets revenue growth of 33% for 2020

On June 25, 2020 at Hanoi Hilton Opera Hotel, the General Meeting of Shareholders 2020 of Hoa Phat Group Joint Stock Company (HPG) took place. The meeting agreed on many important issues, including the business plan of 2020 with expected revenue of VND 86,000 billion, profit after tax of VND 9,000 billion, growing 33% and 19% respectively compared to the results in 2019.

In 2019, Hoa Phat recorded VND 64,678 billion in consolidated revenue, an increase of 14% compared to 2018, profit after tax reached VND 7,578 billion, exceeding the plan. Profit distribution plan for 2019 with total dividends ratio is 25% including 5% in cash and 20% in stock. Implementation time is in the third quarter of 2020.

Quarter II/2020: Hoa Phat sets a new profits record

With the chairmanship of Chairman Tran Dinh Long, the General Meeting of Shareholders in 2020 has 333 participants, on behalf of 576 shareholders holding 2,154 billion shares (78% of the outstanding shares has voting rights), are eligible under the Enterprise Law and the Charter to organize the General Meeting.

At the meeting, Mr. Tran Dinh Long said that Q2 business results could be nearly VND2,700 billion, 32% higher than the same period last year and the highest profit quarter of Hoa Phat history. This was a surprising result for shareholders, because in the second quarter, the whole country was in social isolation for 25 days in April, and the impact of the Covid-19 pandemic on the entire economy. Accumulated 6 months, HPG is estimated at about VND 5,000 billions of profit after tax, up by 29.5% YoY. 

According to the Group's BOM, the profit of the agricultural segment in Q2 is equivalent to the Q1, accounting for about 10-12% of the total profit. In the Q1 of 2020, Hoa Phat made a profit of over VND 480 billion from agriculture, mainly because African cholera led to a sharp drop in pork supply and these factors are unsustainable. Therefore, the Group remains cautious about agriculture. In the short term about 5-10 years, Hoa Phat will moderately invest in expanding and increasing capacity for agriculture.

Also at the meeting this morning, Mr. Tran Dinh Long, Chairman of the Board of Directors, said: “For 2020, Hoa Phat expects to pay a dividend of 20%, striving to pay cash dividends. Because in recent years Hoa Phat has increased investment so the traditional cash dividends has been interrupted. From 2020-2021, the Group will try to restore this tradition. ”

One notable content is the plan to increase the total investment in phase 1 and phase 2 of Hoa Phat Dung Quat Steel Integrated Complex Project was also approved by Hoa Phat shareholders. Accordingly, the total investment is about VND 60,000 billion including VND 30,000 billion of the charter capital contributed by shareholders, while VND 30,000 billion is a loan committed by credit institutions (VND 25 trillion) and internal loan from members of the Group (VND 5,000 billion).

Mr. Tran Dinh Long officially said that the expansion phase of the Hoa Phat - Dung Quat project is in the process of applying for the procedure that may take 2-3 years to complete. When completing the procedures, Hoa Phat will research the market and specifically consult shareholders about the plan to contribute capital once more.

All products will be sold out

Responding to questions from shareholders about the target of construction steel output in 2020, Mr. Tran Tuan Duong - Vice Chairman cum General Director of Hoa Phat Group said: “It is likely that the whole year output will not reach the target of 3.6 million tons but Hoa Phat did not adjust this plan. Shareholders should not concern too much, total consumption of construction steel nationwide decreased by 5% but Hoa Phat's output still increased by 10%, especially sharply growing the amount of exported steel billet. This well proves the competitiveness of Hoa Phat steel”.

Chairman Tran Dinh Long added that the total construction steel output of the whole year is not less than 3 million tons. Hoa Phat will try their best to sell 8 million tons of crude steel when the plant goes into operation in 2021, if the finished product is not sold out, the Group will boost the billet sale ", Mr. Long replied.

With the progress of iron ore price, Mr Long said that the scrap steel price moves in sync with the ore price, so the selling price also tends to grow when the ore price increases, the risk of price is not worrying. Along with iron ore, coal accounts for 30-40% of the price, equivalent to iron ore. In the beginning of the year, the sharp decline in coal prices also had a positive impact on steel production costs, helping Hoa Phat to record good growth in second quarter profits

Releasing HRC products to market from September 2020 is the No.1 task

Based on the assessment of market movements, especially the impacts of the Covid-19 pandemic, Group BOM identified 2020 as a year to both be anti-epidemic and focus on maintaining the growth towards "new power, new stature”. In particular, the completion of phase 2 of Hoa Phat Dung Quat Steel Integrated Complex in the second half of 2020, striving to release commercial HRC products to market from September is the No. 1 task this year.

Regarding the progress of Hoa Phat Dung Quat Steel Integrated Complex, the Group has operated stably Phase 1 with a capacity of 2 million tons of construction steel. For phase 2, with the support of European experts, the continuous rolling mill line of hot rolled coils (HRC) has been able to run interlock tests even better. The quality of output products has been increasingly improved following the current standards of HRC for the mechanical industry. Until now, the HRC product has been successfully tested and manufactured with the Group's steel pipe products. Hoa Phat will try to complete the trial run and have commercial products for the market from September or October. Now, Hoa Phat has recruited mostly enough personnel for the project with more than 9,000 people, than 80% are from Quang Ngai.

The Annual General Meeting of Shareholders of Hoa Phat Group Joint Stock Company in 2020 voted on many important issues including: Reports of the Board of Directors and the Supervisory Board; Report on the results of production and business activities in 2019 and the plan for 2020 (revenue of VND 86,000 billion and profit after tax of VND 9,000 billion); the amendment of some business registration contents, the Charter of the Company; Audited financial statements 2019; increasing the total investment of the projects in phase 1 and phase 2 of Hoa Phat Dung Quat Steel Integrated Complex to VND 60,000 billion.

The Congress also unanimously approved the setting up of funds; dividend plan for 2019 and 2020 and some other important contents.

Nghi Tran