HPG to fly in the face of forecasts

The Ho Chi Minh Stock Exchange-listed firm (HPG) last week announced expected revenue and after-tax profits of VND17,500 billion ($845 million) and VND1,865 billion ($90.1 million) in 2011, up by more than 13 per cent and nearly 36 per cent against 2010, respectively.

HPG, Vietnam’s 16th biggest stock market cap firm, holds the second largest construction steel market share of 13.63 per cent, after the state-owned Vietnam Steel Corporation with 29.7 per cent.

Vu Ngoc Thuy, head of HPG’s public relations, said the private firm’s high revenue this year would mainly come from the steel manufacturing with a 50 per cent contribution.  Its core businesses include manufacturing of steel, steel pipes, furniture, construction equipment, cement, home appliances and doors, real estate and mining.

According to a Sacombank Securities Company (SBS) report, the local steel industry’s prospects in 2011 were not good due to negative impacts of monetary policies, interest rates and capital sourcing restrictions. “Therefore, we do not expect a strong growth in this industry with forecasted profits equivalent to 2010,” said the report.

Many steel companies said 2011 would be a difficult year for heavy industry enterprises, which faced many challenges such as strong exchange rate fluctuations and higher interest rates. “In addition to exchange and interest rate difficulties, steel enterprises are likely to face a lack of electricity in 2011,” said Vietnam-Italy Steel Joint Stock Company board chairman Tran Van Thanh.

Meanwhile, Thuy said like many other enterprises, Hoa Phat would also be impacted by the unfavourable market factors. “Our advantage is solid foundation and integrated production from raw materials to final products to be sold. Therefore, Hoa Phat will stay active with market’s changes and maintain its high revenue and profit,” she added.

In the first month of 2011, Hoa Phat enjoyed VND1,600 billion ($77.3 million) of revenue and VND155 billion ($7.4 million) in after-tax profits, a two-fold jump against the same period last year.

A Hanoi-based securities company analyst believed Hoa Phat would finish its revenue and profit plans in 2011 thanks to steel manufacturing and coal mining.

“Stable operation of two steel factories in northern Hung Yen and Hai Duong provinces, the application of new electricity-saving technologies, together with big output of explored coal will be the biggest factors to support Hoa Phat’s growth this year,” he said.