- DHC announced its H1 2021 results, in which revenue surged 59% YoY (Q2 2021: 66% YoY) and NPAT-MI jumped 79% YoY (Q2 2021: 62% YoY). Per DHC, these robust growth rates were mainly thanks to strong packaging paper demand that outweighed higher input old-corrugated container costs (OCC). 

- H1 2021 results tracked ahead of our expectations. However, given the worse-than-expected COVID-19 outbreaks in Vietnam that could dent packaging paper demand as a result of weaker domestic consumption and manufacturing activities, we foresee insignificant changes to our current forecasts, pending a fuller review.

- Per our estimate, paper revenue (90% of H1 2021 total revenue) soared 61% YoY in H1 2021 (Q2 2021: 68% YoY) as paper sales volume and ASP jumped 18% YoY and 37% YoY, respectively. 

- Meanwhile, packaging sales (10% of total revenue) soared 45% YoY in H1 2021 (Q2 2021: +60% YoY) as domestic packaging demand continued to strengthen. Per our estimate, packaging sales volume advanced 41% YoY in H1 2021 and 50% YoY in Q2 2021.  

- GPM was healthy at 16.2% (+1.5 ppts YoY) in Q2 2021 thanks to ASP hikes. However, this level was well below Q1 2021’s 23.1% as OCC prices continued to spike amid COVID-19-related disruptions to the global old paper collection system and a worldwide shortage of shipping containers. Meanwhile, DHC’s paper ASP inched up only 4% QoQ in Q2 2021, which is typically a low season, per DHC. 

- Cost-saving initiatives, economies of scale and lower net financial expenses further elevated the bottom line as net margin expanded 1.6 ppts YoY to 14.4% in H1 2021.