[Trading BUY/TP:66,800] Gallops of the cavalry


Downgrade to Trading BUY rating, lift TP to VND66,800


We downgrade Hoa Phat Group (HPG VN) to a Trading BUY rating from Buy, despite raising with the target price to VND66,800. Our adjusted TP is mainly derived from: 1) increasing 2021E ASP of steel and materials by 15%; and 2) higher selling volume as high demand for usage in public facilities and billet export, barely affected by COVID-19. However, we think that the readjustment of steel price is going to be slower than expected as China is aiming for strict steel cut and in 2H21 and the recent energy crisis, causing a decent shortage in supply.

Our forecast reveals that Hoa Phat Group’s net profit could reach VND36.6 tn in 2021. Our revised DCF model indicates that the fair price of HPG share is at VND66,800. Meanwhile, Hoa Phat shares are being traded at PER forward of 6.7x, which is a bit higher than its 4-year historical average. We beleive that the recent increase in share price reflects a leviation to our expected 2H21 earnings results in “The tale of a metal knight”.

HPG-Hoa Phat Group

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