Company Quarterly Earnings Update – HPG VN – 2021 9M

Summary of the 2021 9M results of Hoa Phat Group JSC (HPG VN)

9M/2021 results: highlights

  • In Q3/2021, despite the lockdown measures having been implemented for almost the entire quarter, HPG’s revenue still advanced by 72.7% y/y owing to both price increases (due to the surge in raw materials), and a growth of 9.2% y/y in the total sales volume (thanks to strong export demand). Export markets have partially offset the weakness in domestic demand for construction steel (Australia, Canada, Hong Kong, Korea), and acted as the main market for HRC in Q3 (the US and EU).
  • Over 9M/2021, HPG’s net revenue stood at VND105 trillion, up by 63.1% y/y mainly thanks to the HRC segment, which contributed 33.5% of total revenue (from nil in 9M/2020). This was due to: (i) the low-base effect last year as the company just started to sell HRC from Q4/2020, (ii) high demand for HRC thanks to strong pent-up demand for steel products in developed markets after reopening economic activities.
  • The gross margin improved to 30.0% from 19.6% in 9M/2020 as the gross margin improved across product lines (steel prices outpaced rising input prices), particularly the high gross margin of the HRC segment.


  • Turning to Q4/2021 and 2022, we project that selling prices will decline across product lines following a cooldown in raw material prices. Construction steel’s margin will remain stable as domestic demand recovers post lockdown, while HRC’s margin will decrease as export demand softens and supply increases.
  • For 2021: We forecast revenue to reach VND146.9 trillion (+63.0% y/y), and net profit to hit VN35.8 trillion, up by 163.7% y/y thanks to (i) higher revenue stemming from higher steel prices, (ii) a higher gross margin of the steel business. Compared to our previous forecast, we revise net profit up by 8.3% as raw materials prices in Q4 have fallen faster than previously expected.
  • For 2022: Net revenue is projected to reach VND 142.2 trillion, down 3.2% y/y as steel prices are expected to normalize, while all production lines will run at full utilization. The gross margin will soften to 21.4%. Net profit is expected to reach VND24.6 trillion (-31.2% y/y), which is an upward revision of 6.9% from the previous report due to lower input cost estimates.

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