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Title BSC_Company analysis report HT1 ICB 2353 26 05 2014
Report Type Phân tích công ty
Source BSC
Bussiness HT1
Detail Date : 26/05/2014
Total pages : 6
Language : English
File Type : .PDF
FileSize : 716 Kb
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Short Content
The cement sector ‘s outlook has been regarded as bad due to oversupply for the last 3 years. However, there have been improvements recently. Total production capacity of the whole sector in 2013 reached 73 million tons while cement consumption was estimated at 61 million tons.
l   The cement consumption in the first quarter of 2014 has increased by 6.7% compared to the same period of 2013, which is the highest growth in recent years. Exports increased significantly to balance supply - demand at the prices that brought profit to the cement companies.
l   The price of VICEM cement is expected to increase slightly in 2014. Motivation for the climb comes from the equitization of VICEM before 2016. However, the increase will not create much impact on the competitiveness of VICEM. At the same time, the CPI’s lowest level in the last 13 years in combination with the consumption recovery will also create favorable condition for the climb in cement prices in 2014.
HT1 is the largest company in cement sector and obtains effective core-business. With the capacity of 6.8 million tons of cement per year and consumption volume of 5.2 million tons in 2013, HT1 is the largest company in cement sector with the market share of 8.05%. Two most important factors for the growth of revenue and profitability of HT1 are output growth and rise in cement prices. At the current production which is equivalent to only 70% of capacity, revenue will rise sharply when the cement demand increases. Its sales grew by 20% annually for the last 5 years with EBIT margin of nearly 16% which created the huge amount of core earnings (EBIT) for the company.
The biggest risk of HT1 comes from financial expenses which significantly reduce net profit. Because of high financial leverage and a large portion of debts are foreign currencies, the company has to pay huge interest expenses and foreign exchange losses annually. A large portion of core earnings was used to pay financial expenses which strongly lowered net profit. In 2013, core earnings reached 1,014 billion while interest expenses and foreign currency loss were 1,057 billion, as a result, net profit was only 2.5 billion dong.
 
Investment recommendation: as the largest company in the cement industry, HT1 is expected to have great chance to growth when the cement industry recovers. We recommend buying HT1 at 12 months target price of VND 11,763.