Vietnam steel major Hoa Phat pumps massive cash into mammoth complex

Hoa Phat Group JSC, among the leading steel producers in Vietnam, has quickened construction of its $3.4-billion Dung Quat 2 steel complex in the central province of Quang Ngai in order to put it into operation early next year.

Costs of unfinished constructions of the Dung Quat 2 steel complex jumped 88%, or VND19,829 billion ($787 million), from end-2023 to VND42,384 billion ($1.68 billion) as of end-June, its quarterly financial statements show.

Between April and June, the group injected VND15,584 billion ($618.3 million) into the project.

The complex has an annual designed capacity of 5.6 million tons of steel, including 4.6 million tons of hot-rolled coil (HRC) and 1 million tons of specialized steel.

The group plans to invest VND85 trillion ($3.4 billion) in the facility, of which VND35 trillion will be provided by a consortium of eight banks.

The project, located next to the Hoa Phat Dung Quat 1 complex in the namesake economic zone in Binh Son district, Quang Ngai, is scheduled to churn out the first HRC batch in the first quarter of next year.

In the first phase, the new complex will produce 1.5 million tons of steel per year, and it will take three years to reach full operation.

Once fully operational, it will bring the group’s total steel capacity to over 14 million tons per year, strengthening the company's position as the largest steelmaker in Southeast Asia and heading to become among the 30 largest steelmakers globally.

At the group’s 2023 AGM, chairman Tran Dinh Long tipped that the new facility would add VND80-100 trillion ($3.17-3.97 billion) in revenue annually.

At its 2024 AGM in April, Long said the group had prepared a large amount of cash for the project. Despite holding substantial cash reserves, it will not venture into non-core investments or real estate, he noted.

As of June 30, the group had total assets of VND206,609 billion ($8.2 billion), up 10% from end-2023. The total of cash and cash equivalents, and bank deposits was VND28,617 billion, down from VND34,429 billion at end-2023.

Its liabilities totaled VND97,932 billion ($3.9 billion) at end-June, up 15.3% from end-2023.

It earned a consolidated net profit of VND6,190 billion ($245.6 million) in H1/2024, a 3.33-fold increase year-on-year, according to its financial statements.

The firm’s revenue rose 25.5% year-on-year to VND70,408 billion ($2.79 billion) in H1.

Shares of the group, listed on the Ho Chi Minh Stock Exchange as HPG, closed down 1.84% at VND26,700 ($1.06) on Thursday.