Hoa Phat market cap halves in last 9 months

Its HPG share has been one of the biggest losers in Vietnam’s current bearish market, closing Tuesday with a 3.7 percent drop to VND20,800, an 18-month low.

It has fallen by over 50 percent since October, with the market cap declining to VND121 trillion.

Vietnam’s benchmark VN-Index fell by 18 percent in the period.

HPG has seen a sell-off in recent times, with foreign investors selling a total of VND5.5 trillion worth of the shares since January.

Other stocks in the industry like HSG of Hoa Sen Group and NKG of Nam Kim Steel have also slumped by 60-70 percent since the final quarter of last year.

“The steel industry is facing adversities,” Hoa Phat chairman Tran Dinh Long told shareholders at the company’s annual general meeting in April.

Coking coal, which accounts for 40-45 per cent of steel production costs, has seen prices quadruple since Russia launched its military operation against Ukraine.

The conflict has also driven up logistical costs and disrupted transportation, further hitting steelmakers’ profits.

KIS Vietnam Securities has lowered Hoa Phat’s profit margin by 4.4 percentage points to 23 percent for this year.

Meanwhile, global steel prices are falling following China’s lockdown of major cities.

China consumes around 60 percent of global steel output, and the lockdown resulted in a 5 percent drop in demand in the first quarter, Xinhua reported.

On Tuesday Chinese Steel Rebar futures fell below the CNY4,500-per-ton mark, a level not seen since last December and down roughly 15 percent from their early May peak.

Vietnamese steel prices have fallen six times in the last five weeks after April sales declined by 16 percent year-on-year, according to the Vietnam Steel Association.