Hoa Phat Group Q1 Profit Surges 170% to VND 9,055B Despite Record Interest Costs

Overview

Hoa Phat Group (HPG) reported Q1 2026 after-tax profit of VND 9,055 billion, up 170% year-on-year, the highest quarterly profit in five years. Revenue reached VND 53,300 billion, a 40% increase, driven by record steel sales volume of 3 million tonnes. The strong results were achieved despite a record daily interest expense of VND 15 billion, as the Dung Quat 2 complex operated at full capacity.

Key Facts

• Q1 2026 after-tax profit: VND 9,055 billion (+170% YoY), highest in five years.
• Q1 2026 revenue: VND 53,300 billion (+40% YoY).
• Steel sales volume: 3 million tonnes (+26% YoY), contributing 96% of total revenue (VND 51,221 billion).
• Total financial debt as of March 31: VND 90,600 billion, down VND 2,000 billion from year-end 2025.
• Financial expenses: VND 1,900 billion (+18% YoY), a record high, of which VND 1,359 billion was interest expense (~VND 15 billion per day).
• Financial income surged 13.5x to VND 5,900 billion, mainly from the transfer of a real estate project in Pho Noi, Hung Yen.
• 2026 full-year guidance: revenue VND 210,000 billion, after-tax profit VND 22,000 billion; Q1 achieved 41% of the profit target.

What Happened

Hoa Phat Group released its Q1 2026 financial statements, showing a sharp rise in profitability despite elevated interest costs. The company attributed the higher financial expenses to the cessation of capitalization for the Dung Quat 2 project after it became operational and a higher interest rate environment. Deposit rates for 12-month terms at many banks are now around 6.5-7.5%, up 1-3% from late 2025.

The Dung Quat 2 integrated steel complex, located in Quang Ngai province with a total investment of VND 85,000 billion and designed capacity of 5.6 million tonnes of HRC per year, ran at full capacity during the quarter. The company also recorded a significant gain from transferring a real estate project in Pho Noi, Hung Yen, boosting financial income to VND 5,900 billion.

Market Context

HPG shares closed at VND 28,000 on April 15, 2026, down 1.75% on volume of 27.5 million shares. The stock has been under pressure amid rising interest rates and concerns about debt levels, but the strong Q1 earnings may provide support. HPG is listed on HOSE and is the largest steelmaker in Vietnam, with a market cap of over VND 200 trillion. The broader steel sector has benefited from robust construction and infrastructure demand.

Strategic Significance

The Q1 results demonstrate HPG’s ability to generate strong cash flow even with high leverage, as the Dung Quat 2 project reaches full capacity. The company’s strategy of vertical integration and scale in steel production is paying off, with record sales volumes. The one-off property sale boosted financial income, but core steel earnings remain the driver. Management’s guidance implies continued momentum, though interest costs will remain a key variable given the high debt load and rising rates.

What to Watch

• Q2 2026 earnings release to see if profit momentum continues and interest costs stabilize.
• Steel selling prices and raw material costs (iron ore, coking coal) trends.
• Progress on debt reduction, especially for Dung Quat 2-related loans.
• Any further asset sales or real estate project transfers that could boost non-core income.
• SBV policy rate decisions and their impact on HPG’s floating-rate debt.