- 2024-10-25T00:00:00
- Company Research
- DCM announced its Q3 2024 results with revenue of VND2.6tn (USD105mn; -16% YoY) and reported NPAT-MI of VND120bn (USD4.8mn, +65% YoY). Total urea sales volume fell to 138,000 tonnes (-44.3% YoY) while NPK sales volume surged to 41,000 tonnes (+41.7% YoY) with a significant rebound in September sales volume after two consecutive months of declines in both segments. We attribute the YoY decline in revenue to (1) the fall in total urea sales volume and (2) our estimated 2.2% YoY decline in DCM’s urea ASP, which together outweighed the higher contribution of the NPK segment. The divergence between the top line and bottom line was primarily due to 80% YoY lower depreciation expenses (as DCM’s plant was fully depreciated in September 2023), which outweighs the negative revenue growth and lower interest income.
- For 9M2024, DCM recorded revenue of VND9.2tn (USD370mn, +0.7% YoY) and NPAT-MI of VND1.1tn (USD42mn, +39.4% YoY), completing 68%/67% of our respective full-year foreacasts. Total urea sales volume was 642,000 tonnes (-11.3% YoY) whlile NPK sales volume surged to 117,000 tonnes (+39.3% YoY), fulfilling 77%/71% of our respective 2024F projections. We attribute the YoY flat revenue to growth in the NPK segment (due to the higher YoY ASP and consolidation of the Korea-Vietnam Fertilizer Co., Ltd. – KVF, starting from Q2), which offsets the 11% YoY lower urea sales volume as well as a slightly lower urea ASP. Stronger growth in NPAT-MI was mainly due to (1) significantly lower depreciation expenses and (2) the recognition of VND167bn (USD7mn) in financial gain from KVF’s revaluation, which together outweighed the lower interest income.
- Overall, 9M gross profit fulfills 70% of our full-year forecast and is broadly in line with our projections. We anticipate strong Q4 results to be supported by (1) a rebound in fertilizer sales volume QoQ, driven by higher demand for the winter-spring crop season; (2) lower input gas costs QoQ, with ASPs expected to remain relatively stable in Q4; (3) a reduction in selling expenses compared to the 9M average; (4) lower-than-expected G&A expenses, partially offsetting interest income that fell short of expectations, and (5) DCM’s recognition of revenue that was not booked in 9M.
- We see insignificant change to our 2024F NPAT-MI forecast, pending a fuller review. We currently have a BUY rating for DCM with a target price of VND43,100/share.
DCM’s Q3 and 9M 2024 results
VND bn | Q3 2023 | Q3 2024 | YoY | 9M 2023 | 9M 2024 | YoY | % of Vietcap’s 2024F |
Average Brent oil price (USD/bbl) | 86 | 79 | -8.6% | 82 | 82 | -0.3% | 102% |
Average fuel oil price (USD/tonne) | 504 | 458 | -9.1% | 446 | 468 | 5.0% | 101% |
Input gas price (USD/MMBTU), including VAT* | 9.9 | 9.2 | -7.6% | 9.0 | 9.4 | 5.0% | 102% |
Middle east urea price (USD/tonne) | 367 | 341 | -7.0% | 350 | 331 | -5.3% | 103% |
Domestic ASP (VND/kg)* | 9,922 | 9,700 | -2.2% | 9,733 | 9,633 | -1.0% | 100% |
Urea sales volume (thousand tonnes)* | 248 | 138 | -44.3% | 724 | 642 | -11.3% | 77% |
Revenue | 3,151 | 2,635 | -16% | 9,176 | 9,242 | 0.7% | 68% |
COGS | -2,833 | -2,260 | -20% | -7,920 | -7,537 | -4.8% | 68% |
Depreciation expense | -323 | -64 | -80% | -1,024 | -185 | -82.0% | 68% |
Gross profit | 177 | 375 | 111% | 1,256 | 1,705 | 35.7% | 70% |
Sales & marketing exp | -192 | -186 | -4% | -569 | -642 | 12.8% | 81% |
General admin (GA) exp | -85 | -91 | 6% | -301 | -339 | 12.7% | 66% |
Operating profit (EBIT) | -100 | 99 | N.M | 387 | 724 | 87.3% | 63% |
Financial income | 200 | 39 | -80% | 464 | 265 | -42.9% | 50% |
Financial expenses | -9 | -14 | 54% | -18 | -51 | 191.8% | 81% |
Share profit/loss from associates | 0 | 0 | N.M | 0 | 0 | N.M | N.M |
Net other income/loss | 14 | 8 | -45% | 21 | 191 | 798.4% | 114% |
Profit before tax (PBT) | 104 | 132 | 26% | 854 | 1,129 | 32.1% | 63% |
NPAT-MI | 73 | 120 | 65% | 754 | 1,051 | 39.4% | 67% |
Source: DCM, Vietcap (* Vietcap estimates)
Powered by Froala Editor