HANOI – Vietnam's stock market is anticipating a surge of activity in 2025, with significant transformations unfolding across key sectors, offering promising opportunities for investors. Two sectors, in particular, industrial real estate and steel, are attracting considerable attention due to evolving trends and potential for growth.
Industrial Real Estate: Rubber Plantation Conversions Fuel Expansion
A major catalyst for growth in the industrial real estate sector is the ongoing conversion of rubber plantations into industrial zones. This trend gained momentum in late 2024 following provincial development plan approvals and new legislation empowering local authorities. The anticipated wave of project approvals in 2025 is expected to significantly boost prospects for companies positioned to capitalize on this shift.
Rubber industry players are presented with a unique opportunity to repurpose their land holdings. Phuoc Hoa Rubber Company (Phuruco), possessing approximately 15,000 hectares of rubber land in Binh Duong Province, stands to benefit significantly. With the recent approval of the Binh Duong provincial development plan, Phuruco has the potential to convert a substantial portion (2,800 hectares) into industrial zones. Vietcap Securities JSC projects Phuruco can expand around 650 hectares of industrial zone/cluster land between 2026 and 2036 and convert 2,450 hectares of rubber plantation into industrial zone/cluster and urban land from 2027 to 2040. Furthermore, Phuruco's 2025 revenue is expected to be bolstered by its stakes in the VSIP III and Nam Tan Uyen Phase 2 expansion projects. Vietcombank Securities (VCBS) estimates these projects, covering 1,300 hectares collectively, could generate an additional profit of VND300-400 billion (US$11.9-15.9 million) annually for Phuruco after 2025.
Similarly, Dong Phu Rubber JSC (Doruco), located in Binh Phuoc Province, is strategically positioned to capitalize on growing industrial demand. The company plans to expand its Bac Dong Phu Industrial Zone to 317 hectares and its Nam Dong Phu Industrial Zone to 480 hectares. However, SSI Research cautions about potential delays in obtaining permits for these expansions, which could pose challenges for Doruco in 2025. The complex regulatory process surrounding these conversions also presents a potential risk for all companies involved.
Steel Industry: Recovery on the Horizon
The steel industry is also attracting investor interest, with signs of a potential recovery emerging. Projected domestic steel demand growth of 10% in 2025, coupled with a rebounding real estate market and government infrastructure investments, is expected to drive substantial profit growth for companies like Hoa Sen Group. SSI Research forecasts Hoa Sen's profit for fiscal year 2024-2025 to increase by 37% to VND700 billion, driven by recovering steel prices and higher domestic consumption. Despite these positive indicators, the steel sector faces inherent risks, including fluctuating steel prices, inventory management challenges, and market uncertainties. The volatility of hot-rolled coil (HRC) steel prices, particularly the downward trend observed in early to mid-2024, presents a significant risk, potentially impacting profitability.
Navigating the Opportunities and Risks
While both the industrial real estate and steel sectors offer significant growth potential in 2025, investors must carefully weigh the associated risks. Regulatory hurdles, permitting delays, and market volatility are among the factors that could impact company performance. A cautious and well-informed approach is crucial for navigating these dynamic market conditions and maximizing investment returns.
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