- We reiterate our BUY rating for DGC and maintain our target price of 118,000/share. Our higher 2023F earnings forecast and DGC’s higher net cash balance as of Q2 2022 are offset by our lower target EV/EBITDA of 8x from 10x previously, which is to account for an increase in our house risk-free rate assumption and a projected YoY decline in 2023F-2024F earnings.

- We raise our 2022F-2024F aggregate core EBIDTA by 14% and GPM from 40.2% to 45.3% mainly due to our lower input cost assumptions as a result of (1) nosediving non-phosphate input prices and (2) better-than-expected phosphate rock cost savings from DGC’s technology.

- Global phosphate rock prices have surged 60% YTD, which should support phosphorus prices and DGC’s price spreads — the latter given its rising self-supply of rock. We expect DGC’s second mine to come online in Q1 2023 and generate annual savings of USD30mn (14% of 2023F NPAT).

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