“2 months from the second quarter results, shareholders will see how dire the situation”

On the morning of May 24, Hoa Phat Group Joint Stock Company (code HPG) held the annual general meeting of shareholders (AGM) in 2022.

At the meeting, Hoa Phat shareholders approved the business plan for 2022 with expected consolidated revenue of VND 160,000 billion, up nearly 7% compared to last year.

However, despite setting the group’s revenue target to a record high, Hoa Phat’s target for this year’s profit after tax is only about VND 25,000-30,000 billion, down 13-28% respectively compared to the previous year. year 2021.

Hoa Phat management said that this year’s revenue is expected to increase slightly compared to the previous year thanks to the output of Hoa Phat Dung Quat Iron and Steel Complex, container products and revenue from the household electrical appliances segment. However, because this is a challenging year when raw material and fuel prices tend to increase, selling prices fluctuate disproportionately, and financial costs increase due to interest rates, leading to a decline in the group’s profit after tax. reduction.

This year, Hoa Phat said it will complete the legal documents and invest in the construction of a part of the Hoa Phat Dung Quat 2 Iron and Steel Complex project. Currently, this group has signed credit contracts with 8 large banks in Vietnam to borrow VND 35,000 billion to implement the project.

By the end of the year, Hoa Phat is expected to complete and put into trial operation the container factory. At the same time, the goal is to consume all the steel produced, continue to lead the market share of construction steel and steel pipes – galvanized steel sheets in the country.

Also at the meeting, Hoa Phat shareholders approved the dividend payment plan for 2021 at the rate of 35%, of which 5% in cash and 30% in shares. Implementation time quarter 2, 3/2022.

Hoa Phat currently has 4.47 billion shares outstanding, with the dividend payment plan expected in 2021, HPG will spend more than VND 2,200 billion to pay cash dividend and issue an additional 1.34 billion shares to pay dividends. dividend in shares will raise the charter capital after the issuance is expected to over 58,148 billion dong, equivalent to more than 2.5 billion USD in equivalent.

Currently, the charter capital of this company is 44,729 billion VND, however, this steel manufacturer has the undistributed profit after tax by the end of the first quarter of 2022 up to nearly 50,000 billion VND.

With this capital increase plan and after-tax profit target of VND 25,000-30,000 billion, Hoa Phat shareholders agreed with the proposal of the Board of Directors on the 2022 dividend payment rate of 25%.

Sharing at the meeting this morning, Mr. Tran Dinh Long, Chairman of Hoa Phat’s Board of Directors, said that this year’s annual meeting is later than every year because businesses want to meet in person instead of online in the context of the COVID-19 epidemic. 19 complicated developments in the first period of the year. The number of shareholders of Hoa Phat has reached 161,000, the highest among enterprises on the stock exchange.

Can’t pay large cash dividends because a lot of investment capital is needed

Also at the meeting, answering questions from shareholders about reason for setting profit target in 2022 is lower than in 2021, despite increased revenueTran Dinh Long, Chairman of Hoa Phat’s Board of Directors, said that when planning the year, the company’s leadership took into account many factors, in which, the company determined that this year the operation of the steel industry would face many difficulties. towel.

Although the first quarter business results were quite good, however, Hoa Phat Chairman said that shareholders should wait for the business results of the second, third and fourth quarters and then they will see. At this time, the steel industry is not favorable. “Waiting for two more months, there will be Q2 business results, shareholders will see how dire the situation is,” said Mr. Tran Dinh Long.

Mr. Long pointed out a number of reasons why the steel industry will face difficulties in the remaining quarters of the year. Firstly, the price of raw materials increased sharply due to the Russia-Ukraine conflict, causing the price of smelted coal to increase by 100-200 USD/ton.

Secondly, China’s continued maintenance of the “Zero COVID” policy has reduced steel demand in this market, which is also one of Hoa Phat’s main export markets.

“When the Russian-Ukrainian conflict just broke out, many people thought that the Vietnamese steel industry would benefit from two fewer competitors, Russia and Ukraine, because these are both big steel producers. The economy is not so rosy,” said Mr. Tran Dinh Long.

However, although business activities may not be favorable, Chairman of Hoa Phat reassured shareholders that in any circumstances the group will always maintain the best business results in the steel industry.

As the largest shareholder, Mr. Tran Dinh Long is confident that Hoa Phat will not stop, will continue to advance because stopping is death, stopping is being destroyed and overwhelmed by competitors.

He said that the group is currently implementing Dung Quat 2 project and at the same time researching Hoa Phat 3 with a capacity of 6.5 million tons. Thus, Hoa Phat’s total capacity will increase to 21 million tons, equivalent to Vietnam’s current steel consumption demand.

Regarding shareholders’ inquiries Why does the company have more than VND 40,000 billion in cash but still pay low cash dividends?Mr. Long said that Hoa Phat cannot split higher because the company needs a lot of capital to invest in projects in the near future, especially Dung Quat 2 project.

Specifically, a project with a capacity of 6.5 million tons of HRC needs about VND 75,000 – 80,000 billion. Banks lend VND 35,000 billion, the rest the group has to arrange. Hoa Phat needs about 30,000 billion dong of “liquid” money ie money not to be used whenever it is necessary to pay debts, buy raw materials… Therefore, with the available cash, after paying dividends cash rate of 5%, Hoa Phat may have to increase its debt.

Mr. Long pledged that he and his family would not sell the current shares

Answer questions about Hoa Phat’s real estate development planMr. Tran Dinh Long said, the group’s goal is to enter the top 3 real estate companies. In order to achieve the company’s goal, following the general trend of buying land, buying projects to do.

According to him, in the past time, due to easy bond issuance, real estate businesses have a lot of money, buying many projects leading to high prices, however, Hoa Phat has not purchased any projects yet.

“Hoa Phat has money and reputation, so it is advisable to go to localities to apply for tenders, develop projects… will have many prospects due to participating in investment from the beginning, having money, not under financial pressure” Mr. Long is confident.

About Do you buy more HPG shares?, Chairman of the Board of Directors of Hoa Phat said that he and his family will not sell the current amount of shares because there is no need. “Many people think that Hoa Phat and I should buy stocks to support when the price drops. However, because resources are limited, if we want to buy more, we should ask shareholders for permission to sell,” Mr. Long said.

Answer the question steel price forecast in 2022 will be like, HPG’s leaders said that due to some unfavorable developments, HPG forecasts that steel prices from now until the end of the year will decrease due to an increase in supply but a decrease in demand.

About the recent thing Hoa Phat was fined for not having an independent BOD memberMr. Long said, “The group’s leaders know the law, but we think it’s really unnecessary and no big deal. We are also considering a number of candidates who will be considered at the next meeting. or vote in writing”.

On the stock market, in the morning session when the General Meeting of Shareholders was taking place, HPG stock went against the market and temporarily closed the morning session with a decrease of 2.3% to 35,900 dong/share.

According to Dinh Thom