Hoa Phat (HPG) Halts VND 86,000B Dak Lak Steel Complex Study

Overview

Hoa Phat Group (HOSE: HPG) has submitted a report to the Dak Lak Provincial People’s Committee and the provincial economic zone authority proposing to stop research on the Hoa Phat Phu Yen integrated steel complex, an VND 86,000 billion project planned for the Nam Phu Yen Economic Zone. The group instead wants to concentrate resources on the Hoa Tam Industrial Park and on attracting capable secondary investors. The proposal is preliminary and no provincial decision has been issued.

Key Facts

• Proposed project value: approximately VND 86,000 billion (about USD 3.4 billion), with designed capacity of 6 million tonnes per year and a 3 million tonne first phase.
• Hoa Phat began surveying investment opportunities in Nam Phu Yen Economic Zone in early 2022, focusing on the steel complex inside Hoa Tam Industrial Park.
• From June 2026, the group reviewed and adjusted its research direction and stopped pursuing the previous steel complex investment plan.
• Hoa Phat cited unfavorable market conditions, potential scope, schedule or investment-method changes, and knock-on costs for site clearance and local residents.
• The group judged the current scale and conditions fail to deliver investment efficiency commensurate with the capital and risk involved.
• Proposed alternative: prioritize the Hoa Tam Industrial Park, attract secondary projects, and study cooperation with capable industrial investors.
• Hoa Phat also asked the province to jointly resolve remaining land, site-clearance and resource matters from work already carried out.

What Happened

A leader of the Dak Lak Economic Zone and Industrial Park Management Board said on 23 September that the board had received Hoa Phat Group’s report on its projects in the Nam Phu Yen Economic Zone. The official described the submission as an initial proposal only, adding that the provincial People’s Committee and relevant departments are studying and discussing it and have not issued an official decision or response.

According to the report, Hoa Phat actively surveyed and progressively approached investment opportunities in the zone from early 2022 through June 2026, centered on the Hoa Phat Phu Yen integrated steel complex in Hoa Tam Industrial Park. From June 2026 onward, the group said it reviewed and adjusted its research direction and did not continue with the earlier steel complex plan. Hoa Phat argued that proceeding under unsettled market conditions could trigger changes to scale, progress or investment method, raising costs and processing time and complicating site clearance, affected residents and the zone’s overall development plan. If the province agrees not to continue the steel project as currently conceived, Hoa Phat proposes shifting resources to more feasible, flexible and sustainable options, prioritizing the Hoa Tam Industrial Park and cooperation with capable industrial investors.

Market Context

HPG closed at VND 21,050 on 23 September 2026 on the Ho Chi Minh Stock Exchange. The stock sits in the Basic Resources sector, where sentiment has been shaped by construction-steel demand, Chinese export competition and the ramp-up of the Dung Quat complex. The proposed pullback removes a long-dated capacity addition from the pipeline rather than affecting current output, so the near-term earnings base tied to Dung Quat 1 and Dung Quat 2 is unchanged. The decision also touches the Real Estate angle, since Hoa Tam is an industrial-park land play whose value depends on tenant demand rather than steel output.

Strategic Significance

For long-term holders, the proposal signals capital discipline over volume growth. Hoa Phat’s thesis has rested on scale economics in steel, but adding 6 million tonnes into a soft regional market would pressure utilization and pricing across the existing asset base. Redirecting toward the Hoa Tam Industrial Park shifts the group toward fee-based industrial land and infrastructure returns, a lower-capex, more recurring model that also reduces exposure to steel-cycle timing. The open question is whether industrial-park leasing can generate returns comparable to the steel franchise that built HPG’s earnings power.

What to Watch

• Formal response from the Dak Lak Provincial People’s Committee on whether it accepts the halt.
• Hoa Phat’s next quarterly disclosure for any write-down or impairment tied to Nam Phu Yen land and site-clearance spending.
• Progress updates on Hoa Tam Industrial Park phase 1, including land conversion and tenant signings.
• Monthly Vietnam steel production and export data for signs of demand recovery that could revive large-scale capacity plans.
• Any announcement of a partner or secondary investor for the Nam Phu Yen zone.