Hoa Phat Group (HOSE: HPG) | Q1 2025 Update, BUY – 1Y Upside +46.2%

We maintain a BUY rating on HPG with a 12-month target price of VND 37,200/share, representing a potential upside of +46.2% from the closing price of VND 25,450/share as of May 6, 2025.

Q1/2025 Performance Overview

o       Revenue: VND 37,951 bn (+22.1% YoY)

o       EBITDA: VND 6,612 bn (+9.4% YoY)

o       NPAT-MI: VND 3,344 bn (+16.5% YoY)

Compared to its full year 2025 targets, HPG has completed 22.3% of revenue and 22.4% of its profit plan and is broadly on track, given the seasonal strength historically observed in the second half of the year.

Segment-wise Performance:

Steel

o       Revenue: VND 35,715 bn (+23.8% YoY) / PBT: VND 2,850 bn (+17.5% YoY)

o       In Q1/2025, HPG produced 2.66 million tonnes of steel (+25% YoY) and sold 2.38 million tonnes crude steel (+29% YoY). Domestic construction steel sales rose 51.1% YoY, lifting market share to a record 39%, and partly offsetting a 26.2% drop in exports. HRC sales reached 994,000 tonnes (+23.4% YoY), driven by DQSC2 Phase 1, which exceeded 60% utilization in its first month.

Agriculture

o       Revenue: VND 2,033 bn (+32.6% YoY) / PBT: VND 441 bn (+119.8% YoY)

o       Strong pork prices amid African swine fever related supply disruption drove margin expansion. Segment contributed 5% of revenue and 12% of net profit.

Real estate

o       Revenue: VND 202 bn (-71.1% YoY) / PBT: VND 89 bn (-65.4% YoY)

o       No major handovers were recorded in Q1.The company continues to take a cautious approach, focusing on projects with clear returns

Q1 Notable Events:

In April, HPG signed an agreement with Primetals to develop a 500,000 tonnes high-quality wire steel casting line (e.g., steel cord, bead wire, spring steel). This project aims to replace imports and serve advanced manufacturing, with operations expected by end 2026.

HPG deployed VND 6,140 billion in Q1 CAPEX, mainly for Dung Quat 2. Phase 2 remains on track for Q4/2025 completion.  HPG announced long-term investment plan for Phu Yen integrated steel complex (6 million tonnes/year) capacity, estimated capex VND 86,000 billion.