Title NKG_BUY_TP 27,200_BACK TO THE GOLDEN AGE_BSC Company Update
Report Type Phân tích công ty
Source BSC
Industry Basic Materials
Bussiness NKG
Detail Date : 26/01/2022
Total pages : 9
Language : English
File Type : .PDF
FileSize : 1013 Kb
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Short Content
VALUATION 
BSC recommends BUY NKG stock with a 1-year target price of VND27,200/share by the method of comparing P/E with target P/E based on profitability performance, business outlook sales and the market discount rate for shares.
 
FORECAST BUSINESS RESULTS
BSC forecasts NKG's revenue growth in 2021 to reach 27.7% YoY with revenue recorded at VND 14,762 billion driven by 15% growth in volume (810 thousand tons) and increase in selling price based on HRC prices (+12%) YoY). NPAT is forecast to reach VND 600.5 billion (+103% YoY), EPS = VND 3,397/share (assuming 3% deduction for bonus and welfare fund).
 
INVESTMENT THESIS
(1) Steel industry entered a new growth cycle, creating favorable business conditions for enterprises in the industry
(2) NKG invests in a new warehouse to maximize the capacity of galvanizing steel mills to meet the growing demand in the coming time.
 
CATALYST
NKG benefits from the uptrend in HRC prices. However, there are also potential risks when the HRC price corrects.
 
RISKS
(1) Fluctuations in input material prices, especially in HRC
(2) Risks of increasing trade remedies of countries
 
COMPANY UPDATE 
(1) Business results in 2020 saw profit increase 6 times to 295 billion, although revenue decreased by 5.1% YoY to 11,560 billion. Positive results were achieved thanks to production restructuring, debt reduction in 2019 and the increase in HRC prices in 2H2020.
(2) The company sets a strong business plan for 2021 with the following specific targets: Revenue: 16,000 billion (+38% YoY); Profit after tax is 600 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 in the market. In the year 2019/2020, HSG will pay a stock dividend at the rate of 10%.