HPG Group (HOSE: HPG) | 3Q26 Earnings First Take, BUY – Upside +44.3%

Record Earnings Driven By Strong Steel Volumes And Margin Expansion; FY26 Forecast Upgrade Likely

3Q26 Performance: HPG reported record 3Q26 revenue of VND62,214bn (+70.9% YoY, +12.8% QoQ) and NPAT-MI of VND8,217bn (+106% YoY, +29.0% QoQ), supported by steel sales volume of 3.7mn tonnes (+33.4% YoY) and an estimated blended ASP of VND16.3mn/tonne (+32.5% YoY). HRC and construction steel volumes increased 67% and 22% YoY, respectively, reflecting stronger demand and higher utilization following the ramp-up of DQ2. GPM expanded 2.4ppts YoY to 19.2%, despite a 35% YoY increase in hard coking coal prices, highlighting improved fixed-cost absorption and pricing strength.

For 9M26, revenue increased 54.9% YoY to VND170,275bn, while NPAT-MI surged 119.4% to VND23,582bn. Excluding the VND3,932bn after-tax one-off gain from the Pho Noi transfer, underlying NPAT-MI still grew 69.6% to VND19,650bn. Steel remained the key driver, with revenue and NPAT up 59.5% and 90.2%, respectively. Interest expenses also jumped 146% to VND 4,627bn on higher working-capital borrowings.

FY26 Forecast Delivery: 9M26 revenue and NPAT-MI, excluded one-off reached 77.6% and 85.1% of SBBS's FY26 forecasts, respectively, while reported revenue and NPAT fulfilled 82% and 108% of management's full-year targets. We expect to revise our FY26 forecasts upward, although the extent of the upgrade will depend on 4Q26 steel prices, raw material costs and financing expenses.

FY27 Outlook: Domestic construction and infrastructure investment should continue supporting steel demand in FY27. HPG's 700ktpa rail and special steel plant, approximately 80% complete, is expected to commence production in 1Q27, while its 500ktpa high-quality steel mill has entered trial operations. These facilities should strengthen HPG's product mix, although FY27 earnings contribution may be limited during ramp-up. We expect FY27 earnings growth to slow down from high level as in FY26 as DQ2 is already operating at full capacity. Elevated coking coal prices, rising financing costs, persistent Chinese steel exports and Mexico's US$285.5/tonne anti-dumping duty on HRC remain key risks to margins and export competitiveness.

Investment Implications: FY26 Upgrade Potential, FY27 Margin Remains Key

HPG's strong 3Q26 results support an upward revision to FY26 earnings, driven by higher volumes and improved operating leverage. However, FY27 earnings growth will increasingly depend on steel spreads and cost control rather than capacity expansion. We remain constructive on domestic demand but would maintain prudent FY27 margin assumptions until raw material costs and steel pricing trends become clearer.