Ho Chi Minh City Metals and Minerals Corporation (stock code HMC) has held a General Meeting of Shareholders to approve a business plan with revenue target of 3,036 billion VND – a decrease of 3% and after-tax profit of 16 billion VND – a decrease of 24% compared to 2023.
Commenting on 2024, Mr. Vo Tri Nghia – General Director – said that the situation is still very difficult, not as bright as many previous assessments. There are many reasons for this forecast, namely:
Firstly, according to the General Statistics Office, in the first quarter of 2023, the number of businesses withdrawing from the market was 73,900 businesses, an increase of 22.8% compared to the same period last year. On average, nearly 24,700 businesses withdraw from the market each month.
Secondly, in terms of macroeconomics, Mr. Nghia said that inflation may rise again, exchange rate is still in an upward trend, while the intervention of the State is limited.
Thirdly, geopolitical conflict is also a major challenge, especially the conflict in the Red Sea.
Finally, the weakness of the Chinese economy will affect Vietnam. According to Mr. Nghia, fluctuations in China’s economy will directly and “closely” affect Vietnam.
In particular, exchange rate fluctuations are having a major impact on HMC’s operations.
In 2024, HMC sets a sales target of 210,000 tons; steel import target of 55,000 tons, an increase of 13-15% over the same period. Strong fluctuations in exchange rates will greatly affect this steel import segment, although HMC is trying to control this issue.
“ When formulating the plan, we predicted that the USD/VND exchange rate would be at 24,800, but it has now increased to 25,500. This has caused significant losses for HMC” , he said.
At the end of the first quarter of 2024, HMC earned a profit of 3.6 billion VND – completing 23% of the profit plan.
Looking back at 2023, Mr. Nghia said that this was the most difficult year since the COVID-19 pandemic. “The economy is facing many difficulties, the steel industry is also facing many challenges. Steel prices have continuously decreased 19 times and lasted for 3 quarters. It is rare to see such a drop in steel prices in any year,” Mr. Nghia emphasized.
In addition, the sluggish real estate market led to a decrease in demand for steel consumption. In 2023, interest rates on deposits were at record lows, but the amount of money deposited in banks still increased. This shows that opportunities are still limited. If there is no money flowing into the market, how can real estate grow. In the first quarter of 2024, credit growth was even negative, said a representative of HMC.
In that context, HMC recorded net revenue of nearly 3,120 billion VND in 2023, down 9% over the same period. However, net profit reached more than 21 billion VND, 6.7 times higher than the same period, mainly due to the low starting point.
With this result, the Company plans to pay a cash dividend of 8% for 2023, meaning each share will receive 800 VND.
Also in 2023, the Company decided to temporarily suspend the Vinh Loc steel processing workshop expansion project due to administrative procedures, and has not yet completed the sale transaction of Nha Be Steel shares (currently provisioned for over 8 billion VND).
