Investment Recommendation

NKG_HOLD_TP 46,50_REACH A NEW PEAK_BSC Company Update

Date

26/01/2022
Security code

NKG
Company

Nakisco
Language

Tiếng Anh
Number of Downloads

241

Detailed report

VALUATION

BSC recommends HOLD NKG stock with a 2022 target price of 46,500 VND/share, equivalent to 17.8% upside from September 1, 2021 based on P/E = 5.5x valuation method.

FORECAST BUSINESS RESULTS

BSC forecasts that NKG's revenue and net profit in 2021 will reach VND 23,378 billion (+102% yoy) and VND 2,202 billion (+646% yoy), equivalent to EPS 2021 = VND 10,957/share with assumption (i) total sales volume reached 1.02 million tons (+44% yoy) and (ii) average selling price +40% yoy based on world HRC prices.
BSC forecasts NKG's net profit and net profit in 2022 will reach VND 24,066 billion (+3% yoy) and VND 1,928 billion (-13% yoy) respectively, equivalent to EPS 2022 = VND 8,524/share with the assumption (i) ) sales volume +14% yoy and (ii) Average selling price -10% yoy due to the recovery of world steel supply leading to price adjustment.

INVESTMENT THESIS

Export continues to be the driving force for NKG's business results in the future.
HRC steel price continued to remain at a high level, helping to improve NKG's profit margin.

RISKS

HRC price fluctuations can directly affect the profit margin of enterprises.

COMPANY UPDATE 1H2021

NKG's net revenue and NPAT in 1H2021 reached VND 11,862 billion (+149% yoy) and VND 1,166 billion (19.7x yoy) respectively, 94% higher than the 2021 plan.
Consumption volume in 1H2021 reached 564,500 tons (+91% yoy) thanks to strong growth in export volume.
Inventory at the end of Q2/2021 +130% compared to Q2/2020 as NKG boosted production activities to meet market demand.