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Steel stocks rallied

Tuesday - 19/02/2019 18:42
Being recommended by securities companies to lower in investment, but prices of "hot" stocks such as Hoa Sen, Nam Kim and Hoa Phat still go up.
In contrast to the cautious forecasts from the beginning of the year, Vietnam's stock market has increased continuously since the Lunar New Year. VN-Index from above 900 points has surpassed many resistance levels and reached over 960 points to the nearest trading session. Partly contributing to this result comes from the recovery of steel stocks.

HSG share price of Hoa Sen Group Joint Stock Company reached the latest trading session of VND 7,700, up more than 18% compared to the beginning of 2019 and up more than 15% compared to the trading session before the Lunar New Year.

Nam Kim Steel NKG also gained nearly 23% in 7 trading days after Tet, while HPG's Hoa Phat shares also saw similar movements when it increased from VND 27,300 at the beginning of February to over VND 32,000.

Talking to VnExpress, Mr. Nguyen The Minh, Yuanta Securities's director of analysis, said that recent movements of steel stocks came from investors' expectations on short-term recovery when there was information of positive about supply-demand status. The tightening of Chinese steel production has affected the total supply in the market, along with measures of protection from large markets such as the US that have positively impacted the world steel price.

Besides, at the beginning of the year, in big cities like Hanoi or Ho Chi Minh City, it coincides with the time of construction projects, affecting the demand for steel consumption in the market.

However, judging from the sustainability of the upward trend, Mr. Minh said that the recovery of steel stocks may be short-term only when the basic factors affect the supply surplus. still has not been resolved thoroughly. "The rise of the real estate market is a decisive factor to solve the supply-demand problem, but this is not really sustainable. Especially when many large projects in Ho Chi Minh City are in a stagnant state." , Mr. Minh evaluated.

Going into details, the trio of HSG-NKG-HPG is not really similar. According to an analyst, the movement of HPG shares is supported by the cash flow of foreign investors. However, HSG and NKG come from the main internal cash flow.

"The momentum has increased rapidly but it is not necessarily sustainable. The speculative cash flow is often very strong but it will withdraw very quickly if the general market movement is no longer positive," the expert evaluated.

In the analysis report at the beginning of February - just before the "boom" of steel stocks, Ho Chi Minh City Securities Company (HSC) maintained a poor assessment with the duo HSG and NKG due to the non-positive news from business activities.

Nam Kim Steel was assessed by HSC as having a difficult 2018 year as the company was involved in storing large quantities of inventory, while raw material prices fluctuated. Purchasing raw materials at high prices before the market fell, NKG's revenue and profit were mixed. While sales of this steel company increased by 17.4% in 2018, profit after tax decreased by nearly 92%.

With HSG, the situation is not very positive as the business results in the first quarter of fiscal year 2019 also followed the opposite trend. Also with the reason of storing high-cost materials similar to Nam Kim Steel, Hoa Sen's revenue in the first quarter increased by 4.3% but profit dropped by nearly 82% over the same period.

Although both companies have a move to restructure their business by transferring real estate projects or disposing of machinery, HSC believes that there are only short-term impacts and prospects of both HSG and NKG were at a less positive level.

In the report in late January, Ban Viet Securities Company (VCSC) also ranked HSG shares at a low level due to its negative core business results, although the company recorded extraordinary profit from asset liquidation.

According to VCSC, declining gross profit margin and high interest expenses continue to be factors affecting this company's profitability. "Hoa Sen has avoided another quarter of loss thanks to extraordinary profit from asset liquidation. In the context of lower profit plan and difficult situation of galvanized steel industry, we have the ability to adjust down forecast 2019 for HSG ", VCSC commented.

Particularly for HPG, the situation is different when foreign cash flow is one of the main drivers. Continuously since the beginning of February, foreign investors have bought millions of HPG shares on the stock market every day, pushing this share price up nearly 12% in less than 10 trading sessions.

According to Yuanta Securities's director of analysis, this comes from the fact that HPG's stock has dropped to a relatively attractive level after a series of sessions sold out strongly in late 2018 and early 2019. "As one of the stocks in Bluechip group and influence on fluctuations of the index, HPG is an option with foreign funds in Vietnam market, "Minh said and said that the funds have sold strongly HPG shares in the last months of the previous year. is the buyer to balance the portfolio.

Source: Vnexpress newspaper

 Tags: Steel Stocks, NKG, HPG, HSG

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