DGC - Cheaper input costs offset lower selling prices

- DGC released its H1 2023 results with revenue and NPAT-MI dropping 40% YoY and 48% YoY, completing 54% and 50% of our full-year forecasts, respectively.

- Excluding revenue from DGC’s new small battery subsidiary, Q2 2023 revenue edged down 5% QoQ as a slump in ASP was partly offset by higher agricultural phosphate sales volume.

- However, Q2 2023 NPAT-MI edged up 7% QoQ thanks to cheaper phosphate rock costs as DGC began buying from a cheap supply of rock in Q2 2023. This supplier sells only to DGC at favorable prices and contributes 35%-40% of DGC’s rock needs.