Title HT1_BUY_TP VND 18,400_ The leader of cement industry_BSC Company Update_04042019
Report Type Phân tích công ty
Source BSC
Industry
Bussiness
Detail Date : 04/04/2019
Total pages : 7
Language : English
File Type : .PDF
FileSize : 660 Kb
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Short Content

Investment Outlook
We recommend BUY for HT1 with a target price for 2019 of VND 18,400/share based on EV / EBITDA valuation method with the target multiplier of 5.5x. Our target price is equivalent to P/E fw 2019 = 10.8x (as compared to HT1's 2-year average P/E of 10.1x).
    
Business results forecast
BSC forecasts net revenue of HT1 in 2019 will reach VND 8,758 billion (+ 4.6% YoY) based on the following assumptions (1) total cement and clinker consumption is 7.58 million tons (+2.8 % YoY) and (2) the average selling price increases by 2%. EAT is estimated about 721 billion dong (+ 11.8% YoY), stronger than revenue thanks to reducing financial expense, equivalent to EPS of 1,702 dong/share, P/E fw = 9.5x.

Investment highlights (Refer to page 2 for more details)

(1) Demand for residential construction and public investment (especially in transport infrastructure projects) continues to boost cement consumption. Ease industry competition thanks to strong export, especially to China.
(2) Being the leader in the southern market with 28% market share (equivalent to 11% market share of the whole country) and strong brand, HT1 is able to partly transfer a rise input price to selling price.
(3) The balance of foreign currency loans is declining and estimated to be fully repaid in 2021, reducing interest expense and exchange rate risks.

Investment risks
- Competitive risk: We assess that the level of competition has eased thanks to increasing export volume, especially to China. However, unpredictable patterns of the Chinese market may pose a risk of a sudden decline in export demand, causing difficulties for the whole industry due to oversupply in the domestic market.
- Coal price risk: An estimated 1-percent change in coal price could reduce the gross profit margin by 0.2%.
- Exchange rate risk: The estimated 1-percent increase in the exchange rate of EUR/VND and USD/VND may cause unrealized exchange loss of VND 3 billion.

Business update
(1) Business results 2018: Revenue 2018 reached 8,376 billion VND (+2% YoY),  cement consumption was 6.5 million tons (+1.6% YoY) and clinker volume was 550 thousand tons (+28.7% YoY). EAT was 645 billion, strongly up by 32.3% YoY.
(2) Business plan 2019: Ha Tien 1 projects to consume 7.2 million tons of cement (+ 5.61% YoY) and 650 thousand tons of clinker (+ 17.61% YoY) in 2019; net revenue will reach VND 8,927 billion (+6.58% YoY), EBT is VND 917 billion (+13.77% YoY).