- 2024-07-31T00:00:00
- Company Research
- DPM reported its Q2 2024 revenue of VND3.9tn (+6% YoY; +19% QoQ) and NPAT-MI of VND231bn (+129% YoY; -13% QoQ). We attribute the 6% YoY increase in Q2 revenue to a 7% higher urea ASP despite a 5% decrease in sales volume. This strong revenue growth, together with a smaller increase in COGS (3% YoY), 5%/7% decreases in sales & marketing/GA expenses, and an 80% drop in the income tax expense, translate to a significant 129% YoY surge in NPAT-MI. We note that COGS decreased 3% YoY in Q2 2024 due to a 59% substantial decrease in other cash costs, which outweigh the 36% increase in raw materials presumably as a result of a 7% increase in the input gas price.
- For H1 2024, DPM announced revenue of VND7.3tn (+4.1% YoY) and NPAT-MI of VND495bn (+37% YoY). These complete 51% and 68% of our respective full-year forecasts, slightly ahead of our expectations. We estimate that the urea ASP for H1 2024 was VND9,701/kg (+4.5% YoY) and this, coupled with the ~4% YoY increase in urea sales volume, surpasses an estimated 6.7% YoY increase in the input gas price to derive a 26% YoY increase in the gross profit margin (GPM). Additionally, the GPM in the first half of 2024 increased 2.73 bps to 15.8% vs H1 2023, which greatly contributed to the 37% YoY increase in the bottom-line earnings. The NPAT-MI spike is also supported by (1) an 86% decrease in interest expense and (2) a 44% decrease in income tax expense.
- Sales volumes for H1 2024 are generally in line with our expectations, with urea sales volume completing 56% of our 2024 forecast and NPK sales volume completing 49%. We therefore see insignificant changes to our current forecasts for sales volumes, as we expect the urea sales volume to be slightly lower in H2 than H1.
- As a result, we see some potential slight upside in our 2024F earnings forecast for DPM, pending a more comprehensive review. We currently have a MARKET PERFORM rating for DPM with a target price of VND31,900/share.
DPM’s H1 2024 results
VND bn | Q2 2023 | Q2 2024 | % YoY | H1 2023 | H1 2024 | % YoY | % of Vietcap’s 2024F |
Input gas price (USD/MMBTU), including VAT* | 9.96 | 10.63 | 7% | 9.99 | 10.66 | 6.7% | 102% |
Urea average selling price (VND/kg)* | 8,961 | 9,600 | 7% | 9,281 | 9,701 | 4.5% | 101% |
Total urea sales volume (thousand tonnes)* | 267 | 255 | -5% | 480 | 500 | 4.1% | 56% |
Revenue | 3,707 | 3,948 | 6% | 6,972 | 7,255 | 4.1% | 51% |
COGS | -3,318 | -3,403 | 3% | -6,060 | -6,108 | 0.8% | 50% |
Gross profit | 389 | 545 | 40% | 912 | 1,147 | 25.8% | 58% |
Sales & marketing exp | -230 | -219 | -5% | -404 | -418 | 3.4% | 47% |
General admin (GA) exp | -129 | -120 | -7% | -223 | -225 | 0.7% | 49% |
Operating profit (EBIT) | 30 | 206 | 595% | 284 | 504 | 77.3% | 80% |
Financial income | 185 | 53 | -72% | 255 | 81 | -68.4% | 27% |
Financial expenses | -16 | -7 | -58% | -42 | -9 | -79.0% | 21% |
In which, interest expense | -16 | -5 | -71% | -32 | -5 | -85.5% | N.M. |
Net other income/loss | 2 | 2 | -1% | 3 | 1 | -56.2% | 156% |
Profit before tax (PBT) | 201 | 255 | 27% | 502 | 578 | 15.2% | 65% |
Income tax expense | -96 | -19 | -80% | -134 | -75 | -44.1% | 50% |
NPAT | 105 | 236 | 124% | 368 | 503 | 36.9% | 68% |
Minority interests | -4 | -5 | 13% | -7 | -9 | 30.3% | 116% |
NPAT-MI | 101 | 231 | 129% | 361 | 495 | 37.1% | 68% |
EBITDA | 128 | 304 | 138% | 485 | 700 | 44.3% | 68% |
| Q2 2023 | Q2 2024 | ppt Δ | H1 2023 | H1 2024 | ppt Δ |
|
Gross profit margin | 10.5% | 13.8% | 3.32 | 13.1% | 15.8% | 2.73 |
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Source: DPM, Vietcap (* Vietcap estimate)
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