HPG – Solid growth in 1Q2018 – Update

• HPG’s 1Q18 net profit rose 14.3% yoy, driven by higher sales volume and the continued growth momentum of steel prices.
• Gross margin declined to 22.8% in 1Q18, in line with our expectations.
• The company’s galvanised steel plant has been operating since Apr 2018 and will be one of the key earnings growth drivers from 2H18F onwards, in our view.
• The first production line of Dung Quat Steel Complex project is expected to come on stream in 3Q18 with capacity of 600,000 tonnes per year.
• We lower our target price to VND77,300 per share (from VND80,000) due to a higher risk-free rate and recent market re-rating, but we reiterate our Add recommendation..

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