- 2024-04-26T00:00:00
- Company Research
- DCM announced its Q1 2024 results with a net revenue of VND2,744bn (+0.3% YoY; USD110mn) and reported NPAT-MI of VND346bn (+51.1% YoY; USD14mn), which complete 19% and 20% of our respective full-year forecasts. We estimate that urea sales volume for Q1 was 243,000 tonnes (+9.1% YoY; 29% of our forecast) while the average urea selling price (ASP) slightly decreased to VND9,761/kg (-0.8% YoY, broadly in line with our expectation).
- We attribute the stagnant revenue growth to a 10% increase in urea revenue offseting a 66% decrease in the trading segment .
- DCM’s 51% YoY spike in Q1 2024’s NPAT-MI was predominantly due to 1) a tremendous 84% YoY plunge in the depreciation expense after its urea plant fully depreciated starting from September 2023, and 2) increases in financial income (+11% YoY) and other income (+83% YoY), which together outweigh a 22% increase in the selling expense as marketing expenditures increased 26% YoY (VND30bn). This is in line with DCM’s current target of increasing its market shares and sales volume as it strategically acquired a 100% stake in Korea-Vietnam Fertilizer Co., Ltd. (KVF), which will double DCM’s NPK segment capacity. We note that DCM usually books a high marketing expense in Q1 and lowers this expense in subsequent quarters.
- We see a potential downside adjustment to our Middle East urea price forecast as industry players expect a continued downward trend for the urea price in Q2 after a weak Q1. The average price is USD339/tonne in Q1 2024, -9% YoY. This might outweigh higher-than-expected sales volume. Therefore, we see some potential slight downside adjustments to our 2024 earnings forecasts, pending a fuller review.
- We currently have a OUTPERFORM rating for DCM with a target price of VND35,000/share.
DCM’s Q1 2024 results
VND bn | Q1 2023 | Q1 2024 | YoY | % of Vietcap’s 2024F |
Average Brent oil price (USD/bbl) | 82 | 82 | -0.7% | 99% |
Average fuel oil price (USD/tonne) | 401 | 446 | 11.3% | 99% |
Input gas price (USD/MMBTU), including VAT* | 9.0 | 9.3 | 3.4% | 100% |
Middle east urea price (USD/tonne) | 372 | 339 | -8.9% | 97% |
Urea average selling price (VND/kg)* | 9,843 | 9,761 | -0.8% | 101% |
Urea sales volume (thousand tonnes)** | 223 | 243 | 9.1% | 29% |
Revenue | 2,735 | 2,744 | 0.3% | 19% |
COGS | (2,166) | (2,034) | -6.1% | 18% |
Depreciation expense | (349) | (57) | -83.6% | 23% |
Gross profit | 569 | 710 | 24.7% | 26% |
Sales & marketing exp | (277) | (337) | 21.9% | 41% |
General admin (GA) exp | (144) | (115) | -20.5% | 27% |
Operating profit (EBIT) | 148 | 258 | 74.2% | 18% |
Financial income | 119 | 132 | 10.9% | 28% |
Financial expenses | (9) | (14) | 55.8% | 28% |
Net other income/loss | 4 | 8 | 83.2% | 34% |
Profit before tax (PBT) | 262 | 383 | 46.2% | 20% |
NPAT-MI | 229 | 346 | 51.1% | 20% |
EBITDA | 498 | 315 | -36.8% | 18% |
Source: DCM, Vietcap (* Vietcap estimates; ** Vietcap estimates based on DCM’s 2-month bulletins)
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