X-Alpha | HPG VND40,800 +50%: The Steel King Awakens

BSC RECOMMENDATION

BSC has maintained a BUY recommendation on HPG throughout our reports since 2024. In this report, we maintain our BUY recommendation with an end-2026 fair value of VND 40,800/share, implying an upside of 50% versus the closing price on May 13, 2026. Compared with our previous report, BSC raises the target price by 27%, driven by a 26% upward revision to our 2027 NPAT-MI forecast. BSC significantly raises its forecast amid the following factors:

• Steel selling prices are expected to increase by 10% YoY, expanding HPG’s revenue and profit scale.
• Gross margin is expected to improve strongly from Q2/2026.

2026–2027 BUSINESS OUTLOOK

1. BSC believes the upcycle in HRC prices and gross margin will begin from Q2/2026, driven by: (i) production cuts in China; (ii) the effectiveness of Vietnam’s protective measures; and (iii) supply disruptions in Iran, which help ease oversupply pressure.
2. HPG’s sales volume is expected to reach 15.2 million tonnes and 16.4 million tonnes of steel in 2026 and 2027, respectively, equivalent to growth of 28% YoY and 8% YoY, supported by: (i) the recovery of the real estate market; and (ii) stable operations at Dung Quat 2, with output ramp-up beginning after anti-circumvention duties take effect.

EARNINGS FORECAST

In 2026, BSC forecasts HPG to record net revenue of VND 221,884 billion (+42% YoY) and NPAT-MI of VND 28,538 billion (+85% YoY), equivalent to forward EPS of VND 3,718/share. This is based on assumptions of total HPG steel sales volume of 15.2 million tonnes (+28% YoY) and gross margin of 17.3% (+2 ppts).

Compared with our previous report, BSC raises its NPAT-MI forecast by 42%, mainly due to:

• BSC raises steel selling price assumptions by 8%–10% due to higher input costs.
• BSC raises financial income by 156% due to the recognition of a real estate transfer in Q1/2026.

RISKS

High interest rates may affect the real estate market.