The facility will supply steel for key national infrastructure projects including the North-South high-speed railway, the Hai Phong-Hanoi-Lao Cai railway, and several urban railway systems in Hanoi and Ho Chi Minh City, the broker said in a recent analysis report.

Vietcap expects the plant to become operational by Q2/2027, following a 20-month construction period.

Hoa Phat has planned for an annual production capacity of 700,000 tons and a total investment of VND14 trillion ($532.33 million). Of this, VND10 trillion is approved for capital construction by local authorities, while the remaining VND4 trillion will likely be used for working capital.

Vietcap assumes the project will benefit from a preferential corporate income tax rate of 17% for the first 10 years (as per the 2025 Corporate Income Tax Law), before reverting to the standard 20% rate for the remaining 40 years of its projected 50-year lifespan. This results in a weighted tax rate of approximately 19.4%.

Tailwinds from both domestic and global factors

Vietcap believes Hoa Phat is well-positioned for growth, backed by favorable conditions both at home and abroad.

Domestically, infrastructure demand remains robust, fueled by the expansion of Hoa Phat’s Dung Quat 2 integrated steel complex in the central province of Quang Ngai and strong public investment disbursement.

In the first seven months of 2025, public investment spending surged about 70% year-over-year, reaching 44.4% of the year's target. In July alone, disbursement doubled year-on-year, accounting for 63% of the Q2 total.

Meanwhile, the domestic hot-rolled coil (HRC) market continues to face supply shortages, with anti-dumping duties in place to protect local producers from Chinese imports.

Globally, Hoa Phat’s margins are expected to improve as steel prices in China gradually recover, supported by the Chinese government’s new policies aimed at curbing "unfair competition" and excess capacity. Additionally, iron ore supply is forecast to increase in 2026-2027, which could ease input costs.

While the Chinese steel rebound may remain volatile in the short term due to weak property demand and the time needed to reduce oversupply, Vietcap sees stronger momentum in the medium to long term.

A new steel price cycle in China, they argue, will help push Vietnamese prices higher, benefiting producers like Hoa Phat, whose input costs remain low due to earlier purchases, by widening profit margins.

Therefore, Vietcap maintains its buy recommendation and raises the target price of HPG to VND35,300 ($1.34) per share (from the previous target of VND31,700 per share), as Hoa Phat offers an attractive growth investment opportunity, with a projected compound annual growth rate (CAGR) in profit of 32% during the 2024-2027 period.

On the Ho Chi Minh Stock Exchange (HoSE), HPG closed on Friday at VND26,000 ($1) per share.

In Q2/2025, Hoa Phat reported revenue of VND36.29 trillion ($1.38 billion), down 9% year-on-year. However, a sharper decline in input costs boosted net profit by 28% to VND4.27 trillion ($162.7 million), the highest quarterly profit since Q3/2022.

For the first half of the year, revenue totaled VND74 trillion ($2.82 billion), while net profit reached VND7.6 trillion ($290 million), up 5% and 23% year-on-year, respectively. These results represent 43% of the firm’s annual revenue target and 51% of its full-year profit goal.