- 2024-04-22T00:00:00
- Company Research
- DGC released its Q1 2024 results with flat revenue QoQ but NPAT-MI dropping 14% QoQ, completing 21% and 18% of our respective full-year forecasts.
- These results are in line with our expectations and the preliminary results announced at DGC’s AGM on March 24, 2024. We foresee insignificant changes to our forecasts, pending a fuller review. We expect earnings to surge going forward as phosphorus demand bounced back and factory maintenance ended.
- In Q1 2024, DGC conducted maintenance of the phosphorus and wet phosphoric acid (WPA) production lines. This lasted several weeks throughout January and February. Total sales volume in phosphorus content edged down 7% QoQ per our estimate. Meanwhile, DGC saw a 25% QoQ increase in depreciation expenses as its yellow phosphorus (P4) capacity was expanded. Maintenance completed in Q1 2024.
- Industrial phosphorus chemical (IPC) sales volume edged up 7% QoQ per our estimate. This was fueled by strong demand from customers in East Asia and the US and partly offset by factory maintenance. Looking forward, management expects ASP to be lifted when prices increase and East Asian customers contribute more from March. East Asian and US customers accept higher P4 prices of USD4,200/tonne compared to Indian customers at USD3,700/tonne. DGC is currently operating at full capacity utilization.
- Inventory fertilizer sales partly offset weak WPA exports. Agricultural phosphate (AP) sales dropped by 15% QoQ mainly due to sales volume, per our estimate. In addition, the AP product mix was temporarily shifted from WPA to MAP and DAP fertilizers (two types of ammonium phosphate fertilizers), which reduced GPM. These fertilizers are sold domestically and do not enjoy an input cost VAT refund. We estimate that fertilizer sales roughly doubled QoQ.
DGC’s Q1 2024 results
VND bn | Q1 2023 | Q4 2023 | Q1 2024 | YoY | Q1 2024 as % of 2024F | 2024F |
ASP* (VND mn/tonne) | 85 | 63 | 66 | -22% | 90% | 73 |
Industrial phosphorus chemicals | 121 | 93 | 96 | -20% | 96% | 101 |
Agricultural phosphates | 50 | 47 | 47 | -4% | 104% | 46 |
Revenue | 2,483 | 2,388 | 2,385 | -4% | 20% | 11,712 |
In which:* |
|
|
|
|
|
|
- Industrial phosphorus chemicals | 1,618 | 1,157 | 1,272 | -21% | 19% | 6,740 |
- Agricultural phosphates | 728 | 1,125 | 950 | 30% | 26% | 3,625 |
Gross profit | 890 | 784 | 766 | -14% | 18% | 4,179 |
Selling expenses | -115 | -95 | -105 | -8% | 20% | -515 |
G&A expenses | -34 | -49 | -40 | 19% | 21% | -196 |
EBIT | 742 | 640 | 621 | -16% | 18% | 3,468 |
Financial income | 164 | 194 | 165 | 1% | 21% | 798 |
Financial expense | -20 | -36 | -18 | -10% | 21% | -84 |
Others | -1 | 0 | 1 | N.M | N.M | 0 |
PBT | 885 | 799 | 769 | -13% | 18% | 4,182 |
NPAT-MI | 786 | 720 | 673 | -14% | 18% | 3,690 |
EBITDA | 822 | 738 | 727 | -12% | 19% | 3,828 |
GPM | 35.9% | 32.9% | 32.1% |
|
| 35.7% |
SG&A as % of revenue | 6.0% | 6.1% | 6.1% |
|
| 6.1% |
EBIT margin | 29.9% | 26.8% | 26.0% |
|
| 29.6% |
NPAT-MI margin | 31.7% | 30.1% | 28.2% |
|
| 31.5% |
EBITDA margin | 33.1% | 30.9% | 30.5% |
|
| 32.7% |
Source: DGC, Vietcap (revenue breakdown and ASP are Vietcap’s estimates)
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