HPG_Iron King ascend the throne_Company visit note_EN

Valuation
We recommend Buy HPG with a target price of VND 79,300/share (+ 20.2% from the closing price on Feb 28, 2012) based on
 FCFF method (assuming WACC is 13.04% and g is 2%)
and PE method (with target PE is 13x)
Earning Forecast
We forecast that in 2018 HPG's revenue will come to VND57.227 billion (+24.08% yoy), gross profit margin was 22.5% lower than that of 2017 due toPhase 1 of Dung Quat project must import billet from outside. EAT is VND 9.382 billion (+17.2% yoy), EPS 2018 = VND 6,184.
Catalyst
International ore prices are up by 6.7% in 2018, causing a slight increase in China and Vietnam steel prices
Investment risk
Business results are affected by the price of iron ore raw materials.
Demand for inputs depends on the economic cycle
Business Update (see page 2 for more details)
(1) Market share continues to improve, maintaining leading position: continue to dominate, take over the market as current trend in China
(2) Production capacity is being boosted, Steel consumption is estimated  around 2.7 - 2.8 million tons in 2018.  Galvanized Factory with the capacity of 400,000 tons / year also will come into operation in 2018.
(3) Steel segment continues to get benefit from domestic demand and anti-dumping tax. Domestic steel prices in China are 686 USD/ton (about 15 million VND/ton), contributing to limit the amount of steel imported into Vietnam.
(4) Steel price increases in line with the world ore price : Ore price in early 2018 is in a rising trend, so we have optimistic for the HPG steel price  in Q1 / 2018.
(5) Profit from real estate and agriculture: Mandarin Garden 2 project is expected to record the most profit (about 500 billion) in 2018, profit contribution of the agricultural sector has not yet substantial.
(6) Progress of Dung Quat project: fast, timely. It is forecasted that HPG will have to increase its debt to about 8,200 billion dong to serve Dung Quat project in 2018