Title NKG_BUY_TP 27,200 VND_Upside +34.3%_Back to the heyday_BSC Company Update
Report Type Phân tích công ty
Source BSC
Bussiness NKG
Detail Date : 26/05/2021
Total pages : 9
Language : English
File Type : .PDF
FileSize : 1101 Kb
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Short Content
VALUATION
We issue a BUY recommendation on NKG shares, with a target price of VND27,200 per share based on P / E method with a target P / E of 8 times, drawing form company profitability, prospects and the market discount rate for the stock.
 
FORECAST OF BUSINESS PERFORMANCE (For details, please refer to page 5)   
BSC forecasts that NKG’s revenue growth in 2021 will reach 27.7% YoY with recorded revenue of VND14,762 billion, driven by 15% growth in volume (810 thousand tons) & the increase in HRC selling price (+ 12% YoY). NPAT is estimated to reach VND 600,5 bil (+103% YoY), EPS = VND3,397/ share (assuming deduct 3% from welfare fund). 
 
INVESTMENT THESIS                                                                                                          (1) Vietnam’s steel industry has entered a new growth cycle, creating favorable conditions for steel producers.
(2) NKG invests in new warehouses to maximize the capacity of galvanizing steel mills to meet the growing demand in the upcoming period.
 
CATALYST
NKG’s profit has benefited from the continuous increase in HRC.  However, there are also risks when HRC.     
                         
INVESTMENT RISKS
(1) Volatility in input material prices, especially in HRC prices. 
(2) Increasing risks of trade defense measures by other countries.
 
FINANCIAL RESULTS & BUSINESS UPDATE  (For details, please refer to page 3)
(1) 2020 recorded NKG’s NPAT increase 6 times to VND295 billion, although revenue decreased by 5.1% YoY to VND11,560 billion. Positive results obtained by active restructuring of production, reduction of debt in 2019 and rising HRC prices in 2H2020.
(2) The company sets a strong business plan for 2021 with the following specific targets that revenue: VND16,000 billion (+38% YoY); NPAT: VND600 billion, double the same period. BSC assesses that NKG's plan is feasible considering the company's positive export orders until the middle of Q2/2021 and HRC's price movement.