Hoa Phat Group, Southeast Asia's leading steel manufacturer, is positioned for a remarkable financial transformation as its new Dung Quat 2 steel complex nears completion. According to Vietcombank Securities' recent analysis, the company's net profit could reach between VND20-25 trillion ($793-991 million) once the facility achieves full operational capacity.
The ambitious Dung Quat 2 project, situated in Vietnam's central Quang Ngai province, is advancing ahead of schedule, with initial test production expected to commence in Q4 2024. The facility's development follows a strategic two-phase approach, with the first phase scheduled for operational launch in Q1 2025, followed by second-phase testing in Q3 2025 and full operations in Q4 2025.
The new complex's impact on Hoa Phat's production capabilities is substantial, with an annual capacity of 5.6 million metric tons. VCBS projects a graduated increase in sales volume, beginning with 1.5 million metric tons in 2025, escalating to 4 million metric tons in 2026, and reaching 6 million metric tons by 2028. This expansion is expected to drive company revenues to VND175-200 trillion ($6.94-7.93 billion).
The timing of Dung Quat 2's launch could prove particularly advantageous, coinciding with Vietnam's potential implementation of anti-dumping taxes on Chinese hot-rolled coil steel imports. This protective measure could significantly benefit Hoa Phat's market position and sales performance in the domestic market.
The company's current performance already shows promising momentum, with Q3 2024 results revealing a net profit of VND3,022 billion ($119.78 million) on revenue of VND34 trillion, representing year-on-year increases of 51% and 19% respectively. These figures demonstrate the company's strong market position and operational efficiency.
Market conditions appear increasingly favorable for Hoa Phat's expansion. The recent announcement of major stimulus measures by the Chinese central bank to revitalize their real estate market is expected to boost construction activity, potentially increasing steel demand. Additionally, falling raw material costs, with iron ore prices dropping to $91 per metric ton and coal prices reaching a three-year low at $186 per metric ton, suggest improved profit margins for the company.
The convergence of these factors, expanded production capacity, potential trade protections, favorable market conditions, and lower input costs, positions Hoa Phat Group for significant growth in the coming years. The company's strategic investment in the Dung Quat 2 complex appears well-timed to capitalize on both domestic and regional market opportunities.
