- We reiterate our BUY rating for DGC and raise our target price (TP) by 12% as we increase our aggregate 2024F-2027F core EBITDA by 10% and roll our TP horizon from end-2023 to mid-2024.

- We increase our EBITDA forecasts mainly because we incorporate DGC’s recently acquired factory into our projections. This factory will raise DGC’s yellow phosphorus (P4) capacity by 17%. 

- YTD, the prices of DGC’s key products and input materials have declined by ~20%. However, DGC will begin generating cost savings from cheap input phosphate rock from a new supplier in Q2 2023, which we believe will offset the impact of the price spread compression on profits.

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