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Hoa Phat Group (HPG VN) – H1 2025 Earnings – Steel Demand Surges, New Capacity Ahead
Summary of H1 2025 results and outlook of Hoa Phat Group JSC (HPG VN)
- Vietnam’s steel market posted double-digit growth in H1/2025, driven by robust domestic demand. Total steel consumption rose 11.4% y/y to 15.6mn tons, supported by accelerating public investment and a new wave of residential projects following the resolution of legal bottlenecks, along with robust investment in new industrial park projects. In contrast, exports declined sharply amid global market volatility. On July 6 2025, Vietnam has officially imposed anti-dumping duties on China imported hot rolled coil (HRC), which set to bolster continue surge in sales of locally produced HRC.
- HPG’s net revenue rose 4.4% y/y in H1/2025, supported by robust sales volume growth while partly offset by softer selling prices. The steel segment, which accounted for 93.8% of total sales, recorded a 21.5% y/y increase in volume to 5.6mn tons. This growth was led by a 41.7% y/y jump in HRC sales, lifting HPG to the number one market share, supported by Phase 1 of DQSC2 reaching near 100.0% capacity after its March commissioning. Other products, including construction steel, billets, and steel pipes, also posted strong volume growth. Gross margin improved to 16.3%, up from 13.4% in H1/2024, aided by a sharp decline in input costs relative to selling prices. Net financial expenses rose 39.1% y/y due to reduced short-term investments. These dynamics contributed to a 23.0% y/y increase in net profit to VND7.6tn.
- The Dung Quat Steel Complex Phase 2 (DQSC2) is set to commence operations in September 2025, ahead of the original Q4/2025 schedule. Once fully operational, HPG’s crude steel production capacity will reach 14.5mn tons per year, with HRC capacity doubled compared to last year. With this expansion, HPG expects to fully replace import volumes and meet domestic HRC demand. HPG has also received approval to amend the DQSC2 project with a new investment in a high-quality steel casting and rolling facility with an annual capacity of 0.5mn tons, supporting its ambition to become a regional leader in high-specification steel products.
- We revised our 2025F net profit forecast reflecting stronger profit margins and early commissioning of new capacity. Domestic consumption is expected to remain resilient, supported by robust infrastructure and real estate activity, while global oversupply pressure shows signs of easing. China’s “anti-involution” policy—aimed at curbing excess capacity and improving quality—may help steel prices gradually recover from multi-year lows. For HPG, ahead-of-schedule capacity expansion should drive further HRC sales growth. Construction steel demand is likewise projected to stay firm. Profit margins are projected to maintain at H1 level as input costs stay stable. Additionally, We expect the D/E ratio to peak in 2025 and decline from 2026, assuming no major investments in the next three years.
Read our previous analysis on HPG’s quarterly earnings.
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Featured image credit: https://www.hoaphat.com.vn/
