Hoa Sen (HSG) FY2025-26 Profit Falls 15% to VND 623B on Interest Costs

Overview

Hoa Sen Group (HSG), listed on HOSE, reported fiscal year 2025-2026 revenue of more than VND 38,650 billion, up roughly 4% year on year, while net profit fell 15% to VND 623 billion. The decline was driven primarily by a near-130% jump in interest expenses to VND 420 billion, even as the company beat both of its own profit scenarios set at the start of the year.

Key Facts

• Fiscal year 2025-2026 ended 30 September; revenue reached more than VND 38,650 billion, up about 4%.
• Net profit after tax fell 15% to VND 623 billion, an average of roughly VND 52 billion per month.
• Interest expenses rose nearly 130% to VND 420 billion, the main driver of the profit decline.
• Gross margin edged up to 12.6% on improved selling prices, despite lower sales volume.
• Management’s original plan targeted VND 35,000 billion revenue and VND 500 billion profit; the upside case was VND 37,000 billion and VND 600 billion.
• Total assets reached nearly VND 22,800 billion at end-September, up almost VND 4,000 billion from the start of the year.
• Total liabilities rose from about VND 7,600 billion to nearly VND 10,800 billion over the same period.

What Happened

According to the consolidated financial statements cited in the report, Hoa Sen’s fiscal 2025-2026 revenue exceeded VND 38,650 billion even as consumption volume declined year on year. Higher selling prices lifted the gross margin slightly to 12.6%. The sharpest movement on the income statement was interest expense, which climbed nearly 130% to VND 420 billion and accounted for most of the 15% fall in net profit to VND 623 billion.

Chairman Lê Phước Vũ said steel and sheet products remain the company’s near-term pillar, with capacity stable at roughly 1.8-2 million tonnes per year, two to three times the nearest competitor. He nonetheless stated that growth headroom for the sector has reached its ceiling. Management flagged export headwinds from protectionism, trade defence measures and intensifying international competition, while the domestic market faces oversupply, elevated raw material prices and high interest rates. Techcom Securities noted in a report last month that Hoa Sen is shifting focus toward the domestic market to offset shrinking exports and expects flat revenue and profit in fiscal 2026-2027.

Market Context

HSG closed at VND 10,850 on 1 November 2026 on HOSE. The stock trades in the Basic Resources sector alongside other Vietnamese steel names, a group that has faced compressed margins, soft construction demand and elevated funding costs through the cycle. The result reflects a domestic steel market where public investment has supported demand but surplus supply and high interest rates continue to pressure producers. The company’s balance sheet expansion, with liabilities up roughly VND 3,200 billion, underscores the working-capital intensity of the model at current rates.

Strategic Significance

The core issue for long-term holders is not the profit miss but the cost of carrying the business. A 130% increase in interest expense against a 4% revenue gain shows that Hoa Sen’s earnings are now highly sensitive to funding costs rather than volume growth. Management’s own admission that steel growth headroom has peaked argues against multiple expansion on the core business, and the shift toward domestic sales exposes the company to the same oversupplied market as peers. Beating a deliberately conservative plan does not change that arithmetic.

What to Watch

• Fiscal 2026-2027 revenue and profit guidance, and whether management repeats its flat outlook.
• Interest expense trajectory in the next quarterly filing, tied to working-capital borrowing rates.
• Domestic sales volume versus export volume in the next disclosure.
• Further moves in total liabilities, which rose to nearly VND 10,800 billion.
• Any announced diversification beyond steel and sheet products, given the stated ceiling in the core segment.