We reiterate our BUY rating for DGC and raise our target price (TP) by 11% to VND84,000/share as we change our 2023F/24F/25F core EBITDA by 4%/8%/-2% and raise our target EV/EBITDA from 5.5x to 6.0x — this multiple is applied on average 2023F-2024F core EBITDA.
- We raise our 2023F-2025F phosphorus ASP by 4% as demand has recovered quicker than expected. This is partly offset by an assumed six-month delay for Phase 1 of DGC’s chlor-alkali project by and removing Phase 2 from our forecasts.
- We nudge up our target EV/EBITDA as DGC’s significantly lower capex needs result in a 40% increase in our aggregate 2023F-2025F net financial income, which is not captured by EBITDA.
- We expect Q3 2023 earnings to recover QoQ and 2024 EPS to grow 33% YoY, which is a result of surging industrial phosphorus chemical sales volume thanks to a recovery in demand and DGC’s recently acquired phosphorus factory that increased its capacity by 16%.