X-Stock | HPG VND 32,200, +17%: Wait for tariff barriers to create an entry opportunity.

INVESTMENT THESIS

1. BSC maintains its expectation that HRC prices will increase in 2026, supported by Vietnam’s potential imposition of anti-circumvention duties to prevent HRC imports from China, expected in March 2026. BSC forecasts Hoa Phat’s HRC selling price = USD 528/tonne in 2026 (+3% YoY).

2. BSC is monitoring and reassessing the downward trend in raw material prices in 2026 amid persistent oversupply in the steel industry. BSC expects China’s 2026–2030 development policy, which is being submitted in Q4 2025 and is expected to be approved in March 2026, to include capacity cuts in environmentally polluting industries. This should help lower input raw material prices in the coming period.

DETAILS OF Q4 2025 BUSINESS RESULTS UPDATE

At the end of Q4 2025, HPG recorded net revenue = VND 46,176 billion (+34% YoY), NPAT-MI = VND 3,861 billion (+38% YoY).

BSC’S ASSESSMENT

For full-year 2025, HPG recorded net revenue of VND 156,116 billion (+12% YoY), NPAT-MI at VND 15,450 billion (+29% YoY), fulfilling 94% and 90% of BSC’s revenue and profit forecasts, respectively.

1. HPG’s profit was lower than BSC’s expectation, compared with (BSC’s Q4 forecast of VND 5,000 billion). BSC believes this was mainly due to two factors:

(i) Wide-width HRC entered Vietnam in November, reducing the effectiveness of the provisional anti-dumping duty imposed in Q2. As a result, HPG had to lower its listed HRC selling price in the second half of Q4 to boost sales volume (USD 526/tonne in September to USD 504/tonne in December). In December, BSC estimates that the HRC production line operated at only 70% utilization. Details are shown in the table below.

(ii) From January 1, 2026, the EU will begin implementing CBAM. However, there is currently no carbon credit price available to determine the applicable tax level. This affected year-end HRC purchasing activity among galvanized steel producers, which remained relatively weak.

2. BSC updated this issue in its sector report in December, after the release of the Q3 Express Note.

BSC highlights the following points:

• BSC maintains its view that: (1) raw material prices will decline due to oversupply in China; and (2) anti-dumping duties and anti-circumvention duties will help reduce competition between HPG and Chinese HRC. This should enable HPG to raise selling prices and improve its gross profit margin.(Details are provided in the previous report).
• However, BSC has delayed the expected timing for HPG to increase HRC selling prices from Q1 2026 to Q2 2026, following: (1) Vietnam’s imposition of anti-circumvention duties on wide-width HRC; and (2) clearer information on the EU’s CBAM tax mechanism. As a result, BSC has revised down its 2026 gross profit margin forecast for HPG.