- 2025-01-24T00:00:00
- Company Research
NKG announced weak 2024 results with details as follows:
Full-year results:
- Net revenue: VND20.6tn (USD808.8mn; +11% YoY; 104% of our 2024F forecast).
- NPAT-MI: VND453bn (USD17.8mn; +286% YoY; 68% of our FY2024F forecast).
- Total sales volume of galvanized steel sheets and steel pipes: 1,014,600 tonnes (+18% YoY; 100% of our 2024F forecast).
- Implied blended ASP: VND20.3mn/tonne (USD800/tonne) (-6% YoY; 103% of our 2024F forecast).
Q4 2024 results:
- Net revenue: VND4.5tn (USD175.6mn; -14% QoQ; +0% YoY).
- NPAT-MI: VND18bn (USD0.7mn; -72% QoQ; -18% YoY).
- Total sales volume of galvanized steel sheets and steel pipes: 232,300 tonnes (-7% QoQ; +5% YoY).
- Implied blended ASP: VND19.2mn/tonne (USD755/tonne) (-7% QoQ; -4% YoY).
Exports drove full-year top-line growth but weighed on the total revenue performance in Q4 2024. In Q4, net revenue declined 14% QoQ and was flat YoY, primarily due to weak export sales, which fell 31% QoQ and 9% YoY. This was partially offset by domestic sales, which grew 22% QoQ and 15% YoY. We believe these results highlight challenges from increased Chinese exports and protectionist measures in key export markets, putting pressure on both sales volume and ASP. For the full year, however, exports drove 11% YoY growth in net revenue, with a 22% YoY increase from 2023’s low base outweighing a 4% YoY decline in domestic sales.
Q4 GPM compressed QoQ, likely linked to weak sales volume. In Q4, GPM fell to 6.7% from 8.7% in Q3 – attributed to weak sales volume which pushed up COGS per unit. For the full year, GPM increased YoY to 8.9% from 6.0% as demand recovered throughout most of 2024 from 2023’s low base.
SG&A expenses declined QoQ as freight rates cooled. In Q4, SG&A expenses dropped 30% QoQ and the ratio of SG&A expenses/net revenue declined to 4.9%. However, Q4 SG&A was still 10% higher YoY. Although NKG does not provide a breakdown of SG&A expenses in unaudited financial statements (FS), we attribute QoQ lower SG&A expenses to QoQ lower demand and lower average shipping costs. We note that shipping costs made up 60%-85% of NKG’s total SG&A expenses over 2019-2023, per its audited FS. Throughout most of Q4, freight rates further cooled down QoQ, but the average level still remain elevated YoY, explaining the 10% YoY higher SG&A costs.
Q4 financial expenses surged, likely due to FX losses. Financial expenses surged 90% YoY in Q4, likely driven by FX losses, as interest expenses rose only 13% YoY during the quarter.
Overall, as 2024 NPAT-MI only fulfilled 68% of our 2024F forecast, we foresee downside risk to our current projections, pending a fuller review.
NKG’s 2024 results
VND bn | Q4 2023 | Q3 2024 | Q4 2024 | QoQ | YoY | 2023 | 2024 | YoY | 2024F | 2024A / 2024F |
Net revenue | 4,459 | 5,188 | 4,469 | -14% | 0% | 18,596 | 20,609 | 11% | 19,905 | 104% |
Gross profit | 273 | 452 | 301 | -33% | 10% | 1,112 | 1,832 | 65% | 1,891 | 97% |
SG&A expenses | -198 | -311 | -219 | -30% | 10% | -739 | -1,138 | 54% | -1,075 | 106% |
Operating profit | 75 | 141 | 82 | -42% | 9% | 373 | 694 | 86% | 816 | 85% |
Financial income | 43 | 60 | 102 | 70% | 134% | 230 | 341 | 48% | 256 | 133% |
Financial expenses | -89 | -118 | -168 | 42% | 90% | -426 | -477 | 12% | -289 | 165% |
- Interest expense | -60 | -49 | -67 | 38% | 13% | -293 | -208 | -29% | -189 | 110% |
Net other income/loss | 0 | 0 | 0 | -112% | -86% | 0 | 1 | 201% | 0 | N.M. |
PBT | 30 | 82 | 16 | -81% | -48% | 177 | 558 | 215% | 783 | 71% |
NPAT-MI | 22 | 65 | 18 | -72% | -18% | 117 | 453 | 286% | 666 | 68% |
GPM | 6.1% | 8.7% | 6.7% |
|
| 6.0% | 8.9% |
| 9.5% |
|
SG&A/sales | 4.4% | 6.0% | 4.9% |
|
| 4.0% | 5.5% |
| 5.4% |
|
OPM | 1.7% | 2.7% | 1.8% |
|
| 2.0% | 3.4% |
| 4.1% |
|
NPM | 0.5% | 1.2% | 0.4% |
|
| 0.6% | 2.2% |
| 3.3% |
|
Source: NKG, Vietcap
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