Company Quarterly Earnings Update – HPG VN – 2021 H1

Summary of the 2021 H1 results of Hoa Phat Group JSC (HPG VN)

H1/2021 results: highlights

  • HPG posted a total revenue of VND66.3 trillion, up 67.2% y/y, driven by a growth of 88.7% y/y in the steel business. This strong growth in steel business is mainly attributed to the hot-rolled-coil (HRC) segment. In H1/2021, HPG has sold 1.3 million tons of HRCs (from nil in H1/2020), a contribution of 33.6% to the total revenue. Meanwhile, long steel’s volume rose only slightly by 4.4% y/y as its production line operated at full utilization.
  • The gross margin increased to 29.7% (vs 18.8% in H1/2020) as the steel business strongly improved, thanks to (i) steel prices outpacing rising input prices, (ii) an increase in the internal use of HRC and billets. Net profit grew by 232.1% y/y to VND16.7 trillion.


  • Steel’s domestic demand in Q3 will be negatively impacted by the current lockdown measures, before rebounding in Q4/2021 thanks to the release of pent-up demand and acceleration in public spending. However, the current COVID-19 situation will have a relatively insignificant impact on HPG’s business as the weak domestic demand can be offset by stronger export orders. For HPG’s steel prices, the construction steel price is expected to soften somewhat in H2 due to weak domestic demand but will still remain at a high level as a result of high raw material prices. Meanwhile, the HRC price is expected to be higher in H2 thanks to the recovering demand in developed countries. Turning to 2022, steel prices are expected to normalize as raw material prices will cool down and the global steel production utilization rate will gradually recalibrate to pre-COVID levels.
  • For 2021: Net revenue is projected to reach VND155.8 trillion, up 72.9% y/y. The gross margin will expand to 27.3% mainly driven by the steel business. Net profit is forecast at VN33.1 trillion, up 143.6% y/y. Such a rise is primarily attributed to (i) higher revenue because of increased steel prices, (ii) a higher gross margin of the steel business.
  • For 2022: Net revenue is projected to be VND 132.6 trillion, down 14.9% y/y as steel prices are expected to normalize, while all production lines will run at full utilization. The gross margin will soften to 22.1%. Net profit is expected to be VND23 trillion (-30.4% y/y).
  • Compared to our last forecast, we revise 2021’s net profit up by 10.1% due to prolonged high levels of HRC prices, leading to better gross profit margins of HRC and steel sheets.

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