- 2024-07-29T00:00:00
- Company Research
- DCM reported its H1 2024 revenue of VND6,607bn (USD261mn; +9.7% YoY) and reported NPAT-MI of VND915bn (USD36mn; +69% YoY). These results complete 48% and 63% of our respective full-year forecasts. We attribute strong NPAT-MI growth despite nearly flat YoY sales volume and ASP to the recognition of VND167bn (USD6.6mn) in financial gain from M&A. We believe this gain is from DCM’s latest acquisition of the Korea-Vietnam Fertilizers Co., Ltd. (KVF) in April with ~USD23.6mn of investing value. This acquisition helps DCM to double its NPK capacity to 660,000 tonnes per annum. DCM’s revenue growth is because of the higher contribution of the NPK segment as a result of DCM’s consolidation of KVF starting in Q2 2024.
- Excluding the one-off gain from the KVF acquisition, DCM’s core NPAT-MI for H1 2024 is VND747bn (USD29.5mn; +38% YoY). This fulfills 52% of our 2024F NPAT and is in line with our current expectation. We attribute strong core NPAT-MI growth to an 83% significant decrease in depreciation expense as DCM’s urea plant was fully depreciated in September 2023, which outweighs an estimated 10% increase in the input gas price.
- DCM’s H1 2024 urea sales volume was 453,210 tonnes (+2.7% YoY; 52% of our 2024F) and NPK sales volume was 76,880 tonnes (+38% YoY; 52% of our 2024F), which are in line with our current forecasts. DCM’s NPK sales volume stalled for the first four months of 2024 before it started to substantially increase in May and June when sales volume for these two months contributed 89% to H1’s total sales volume. We believe the demand picked up as farmers used up their inventory and began to restock.
- We see insignificant change to our core NPAT forecast, pending a fuller review. We currently have an OUTPERFORM rating for DCM with a target price of VND36,000/share.
DCM’s H1 2024 results
VND bn | Q2 2023 | Q2 2024 | YoY | H1 2023 | H1 2024 | YoY | % of Vietcap’s 2024F |
Average Brent oil price (USD/bbl) | 78 | 85 | 9.1% | 80 | 83 | 4.1% | 101% |
Average fuel oil price (USD/tonne) | 434 | 502 | 15.5% | 417 | 474 | 13.5% | 105% |
Input gas price (USD/MMBTU), including VAT* | 9.0 | 9.9 | 10.0% | 8.7 | 9.6 | 10.4% | 103% |
Middle east urea price (USD/tonne) | 310 | 314 | 1.2% | 341 | 326 | -4.3% | 102% |
Urea average selling price (VND/kg)* | 9,683 | 9,600 | -0.9% | 9,763 | 9,600 | -1.7% | 100% |
Urea sales volume (thousand tonnes)* | 218 | 192 | -12.2% | 441 | 453 | 2.7% | 52% |
Revenue | 3,291 | 3,863 | 17% | 6,026 | 6,607 | 9.7% | 48% |
COGS | -2,921 | -3,253 | 11% | -5,087 | -5,288 | 4.0% | 46% |
Depreciation expense | -353 | -64 | -82% | -702 | -121 | -82.8% | 45% |
Gross profit | 370 | 610 | 65% | 939 | 1,320 | 40.5% | 58% |
Sales & marketing exp | -100 | -145 | 45% | -377 | -482 | 27.9% | 67% |
General admin (GA) exp | -71 | -147 | 106% | -216 | -262 | 21.4% | 62% |
Operating profit (EBIT) | 199 | 318 | 60% | 347 | 576 | 66.1% | 50% |
Financial income | 145 | 120 | -18% | 264 | 251 | -4.8% | 47% |
Financial expenses | 0 | -16 | -3871% | -9 | -30 | 248.1% | 47% |
Net other income/loss | 3 | 176 | 5111% | 8 | 184 | 2334.8% | 817% |
Profit before tax (PBT) | 348 | 598 | 72% | 610 | 981 | 60.9% | 60% |
NPAT-MI | 311 | 569 | 83% | 540 | 915 | 69.3% | 63% |
Core NPAT-MI | 311 | 401 | 29% | 540 | 747 | 38.4% | 52% |
EBITDA | 552 | 382 | -31% | 1,048 | 697 | -33.5% | 49% |
Source: DCM, Vietcap (* Vietcap estimates)
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