Company Quarterly Earnings Update – HPG VN – 2021

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

2021 results highlights

  • HPG’ total crude steel capacity increased from 6.7mn tons as per the end of 2020 to 8.5mn tons/year after the 4th blast furnace of Dung Quat Steel Complex (DQSC) came into operation in January 2021. These crude steel production lines gradually ramped up production and reached full capacity in Q4/2021.
  • In 2021, HPG posted a total net revenue of VND7 trillion, up 66.1% y/y. The total sales volume increased by 34.3% y/y thanks to strong demand and increased capacity. The gross margin expanded by 6.5 percentage points to 27.5% thanks to (i) steel prices outpacing rising input prices (ii) an increase in the internal use of HRCs and billet steel, (iii) the high margin of HRC due to its substantially high demand from developed markets. Overall, net profit advanced by 156.6% y/y to VND34.5 trillion.
  • By the end of 2021, HPG’s financial position was healthy as its cash position accounted for 22.8% of the total assets, with financial leveraging being relatively low with a D/E ratio of 0.65x and a D/A ratio of 0.32x


  • The demand for steel products from local markets is very strong thanks to increasing public investment in infrastructure projects in order to support post-pandemic economic recovery. We expect HPG to continue operating to its current maximum capacity, leading to a stable volume until 2024, before the DQSC phase 2 is expected to come into effect. As a result, HPG’s revenue in 2022-2023 will be mainly driven by its selling prices. We believe HPG’s margin will come under pressure in H1/2022 (as input prices are rising fast while steel prices are lagging) but will improve in H2/2022 as steel prices will increase. In short, the gross margin is forecast to reduce in 2022 from a record high in 2021, before normalizing in 2023.
  • For 2022: We revise our forecast net revenue up by 30.5% to VND185.6 trillion (+24.0% y/y) owing to the higher steel prices. The gross margin is expected to tighten to 17.6% from a record high of 27.5% in 2021. Net profit is projected to be VND23.5 trillion, down 32.0% y/y. For 2023: We expect the gross margin to normalize to 21.9%, relatively unchanged with our previous projection. Net revenue is expected to be VND176.0 trillion (-5.1% y/y), and net profit is projected to reach VND28,1 trillion (+20.3% y/y).

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