Hoa Phat (HPG) Q2 Profit Up 51% as Debt Hits Record VND 98.5 Trillion

Overview

Hoa Phat Group (HPG) reported record second-quarter revenue and profit, driven by strong steel sales, while its financial debt reached an all-time high of VND 98.5 trillion as of June 30. The company attributes the debt increase to working capital needs for steel production, but maintains a healthy balance sheet with substantial cash reserves.

Key Facts

• Q2 2026 revenue reached VND 55,557 billion, up 53% year-on-year, the highest ever.
• Q2 net profit after tax was VND 6,424 billion, up 51% year-on-year.
• Financial debt as of June 30 stood at VND 98,530 billion, up 9% from end-2025.
• Short-term loans accounted for 73% of total debt, equivalent to VND 71,433 billion, up over 10% from end-2025.
• Interest expenses rose by VND 186 billion to VND 1,519 billion, the highest ever, due to the cessation of capitalizing Dung Quat 2 project costs.
• Equity reached over VND 141,500 billion, up 8% from end-2025; cash and deposits totaled VND 37,255 billion.
• H1 2026 revenue was VND 108,870 billion (+47%), net profit VND 10,539 billion (+51%), achieving 67% of the annual plan.

What Happened

Hoa Phat Group announced its Q2 2026 financial results, revealing record revenue and profit. The company sold 3.5 million tons of hot-rolled coil and construction steel, up 35% year-on-year, along with other steel products for domestic and export markets. The steel segment contributed 96% of total revenue, with agriculture at 3% and real estate the remainder.

The company’s financial debt rose to a record VND 98.5 trillion, primarily due to increased short-term borrowing for working capital. Management explained that the rise in debt was mainly for production needs. Interest expenses surged to VND 1,519 billion, partly because the company stopped capitalizing interest on the Dung Quat 2 project after it became operational, and partly due to higher commercial bank lending rates in Q2.

Despite higher debt, Hoa Phat’s financial position remains solid. Equity grew 8% to VND 141.5 trillion, and the company holds VND 37.3 trillion in cash and deposits, generating VND 441 billion in interest income in Q2, offsetting borrowing costs.

Market Context

HPG shares closed at VND 21,700 on July 31, 2026, on the HOSE. The company’s record results come amid a robust steel cycle, with strong demand for construction and industrial steel. The broader Vietnamese market has been supported by infrastructure spending and export growth. Hoa Phat’s ability to deliver 51% profit growth while managing higher debt levels is a key focus for investors, especially given the company’s expansion into real estate.

Strategic Significance

Hoa Phat’s record debt and profit highlight its aggressive expansion strategy. The company is investing heavily in steel capacity, including the Dung Quat 2 project, and diversifying into real estate, such as the VND 8,000 billion acquisition of a 20% stake in Song Hong Future Group and participation in a VND 736,963 billion riverside project in Hanoi. For long-term investors, the key is whether Hoa Phat can sustain its growth while managing leverage and interest costs, especially if steel prices soften or interest rates remain elevated.

What to Watch

• Q3 2026 earnings release, expected in October, to see if revenue and profit growth continue.
• Steel price trends, both domestic and global, as they directly impact Hoa Phat’s margins.
• Interest rate movements in Vietnam, as higher rates could increase borrowing costs.
• Progress on the Dung Quat 2 project and its contribution to capacity and profitability.
• Updates on real estate ventures, including the Song Hong project, and their impact on cash flow and debt levels.