NKG Flash note – NOT RATED

NAM KIM STEEL JSC (NKG VN)

A gloomy 3Q2025 business result was due to a decline in output and selling prices along with a narrowing gross profit margin due to increased input HRC prices. The outlook for NKG is expected to be more favorable in 2026, supported by a rebound in residential construction and the Government’s continued emphasis on public investment initiatives.

Revenue weakened due to export headwinds: In 3Q2025, NKG reported revenue of VND3,773 bn (-1% QoQ, -27% YoY), reflecting a contraction in both sales volume and average selling price (ASP). Total steel sales reached 195,000 tons (-3% QoQ, -22% YoY) as export demand continued to soften. Domestic sales volume rose to 138,000 tons (+16% QoQ, +50% YoY), supported by the implementation of anti-dumping duty AD19 on coated steel imports from China and South Korea. However, this was insufficient to offset the sharp decline in exports, which fell 31% QoQ and 64% YoY, amid intensifying global protectionism. The ASP was estimated at VND19.3 ml per ton (+3% QoQ, -7% YoY), with export and domestic prices down 27% and 6% YoY, respectively, resulting in lower topline growth. For 9M2025, NKG recorded revenue of VND11,672 bn (-28% YoY), fulfilling 51% of its full-year target.

Gross margin compressed amid rising HRC costs: NKG’s gross profit margin declined to 4.8% in 3Q2025, compared with 7.1% in 2Q2025 and 8.7% in 3Q2024. The contraction was primarily driven by a sharp increase in input HRC prices following the imposition of anti-dumping duty AD20 on Chinese HRC imports, while low-cost inventories were depleted. In addition, oversupply in the domestic market and sluggish exports intensified price competition, further eroding profitability.

Cost optimization: NKG’s net financial expense fell sharply to VND12 bn (-85% QoQ, -79% YoY), mainly due to lower foreign exchange losses as the company increased the share of domestic raw materials to 50–60% (vs. 20–30% in the same period last year). Selling and administrative expenses dropped to VND109 bn (-35% QoQ, -65% YoY) thanks to reduced export-related costs. Consequently, NPATMI reached VND50 bn in 3Q2025 (-46% QoQ, -24% YoY) and VND207 bn in 9M2025 (-52% YoY), achieving 59% of the annual plan.

Quick comment: We believe that the recovery outlook for the coated steel market in 2026 remains challenged by headwinds from international markets, despite a potential improvement in domestic demand supported by a rebound in residential construction and accelerated public investment. NKG is still in the midst of a restructuring phase, with profit margins continuing to be squeezed due to weak sales volumes and volatile input material prices. Although the Phu My Coated Steel Plant (Phase 1, with a capacity of 500,000 tons per year) is expected to commence operations by end-June 2026, which could enhance both production capacity and domestic market share, the industry’s persistent oversupply risks may limit the investment efficiency and pace of profit recovery for the company.