Hoa Phat (HPG) poured more than 60,000 billion VND into the "iron fist" Dung Quat 2

HPG's total financial debt will reach nearly VND83,000 billion as of December 31, 2024, an increase of more than VND4,000 billion compared to the end of the third quarter and nearly VND18,000 billion higher than in 2023.

HPG's total financial debt will reach nearly VND83,000 billion as of December 31, 2024, an increase of more than VND4,000 billion compared to the end of the third quarter and nearly VND18,000 billion higher than in 2023.

This is the highest level of financial debt of the leading steel enterprise since its operation. The debt increased sharply in the context of Hoa Phat entering the final stage, completing the installation of equipment for phase 1 of the Hoa Phat Dung Quat 2 Iron and Steel Complex Project.

According to schedule, phase 1 will be operational in 2025. Phase 2 is expected to be completed in late 2025 - early 2026.

The project has a scale of 280 hectares, total investment capital of 85,000 billion VND, designed capacity of 5.6 million tons of high-quality HRC/year. When completed, Hoa Phat's crude steel production capacity will reach 14.5 million tons/year, including 8.6 million tons of high-quality HRC steel, making Hoa Phat the leading steel producer in the region, raising the Vietnamese steel brand on the world map.

According to analysis from securities companies, phase 1 of Dung Quat 2 Project will be put into trial operation at the end of 2024 and will start operating from the second half of 2025, expected to help HPG's HRC output grow in the coming years. In particular, in the context of domestic HRC supply not being enough to meet domestic demand, cheap HRC from China is being exported massively to Vietnam. The Ministry of Industry and Trade is in the process of investigating anti-dumping on HRC steel products from China and India. In case trade protection measures are applied, domestic manufacturers will benefit, thereby boosting HPG's HRC sales and prices.

However, the factor that needs to be monitored is HPG's interest rate developments in the 2024-2026 period when HPG increases its debt to construct the Dung Quat 2 project.

According to the 4th quarter financial statements, by the end of 2024, Hoa Phat's unfinished construction assets amounted to VND 63,749 billion, accounting for nearly 30% of total assets, mainly the Hoa Phat Dung Quat 2 Iron and Steel Complex project with VND 60,108 billion, an increase of VND 37,552 billion compared to the beginning of the year.

Regarding business results in 2024, HPG achieved 140,560 billion VND in revenue, an increase of 17% over the previous year, achieving the 2024 plan. Profit after tax reached 12,020 billion VND, an increase of 77% over 2023 and exceeding the annual target by 20%.

Source: https://baodautu.vn/hoa-phat-hpg-rot-hon-60000-ty-dong-vao-qua-dam-thep-dung-quat-2-d243334.html