DRC - Solid earnings growth on stronger sales and gross margin expansion - Earnings Flash
  • 2024-07-17T00:00:00
  • Company Research
  • H1 2024 results: DRC announced its robust H1 2024 results with net revenue of VND2.3tn (USD91.7mn; +3% YoY) and NPAT-MI of VND127bn (USD5.0mn; +66% YoY), fulfilling 48% and 47% of our respective full-year forecasts. As the results are in line with our expectations, we see no risk to our 2024F forecasts, pending a more comprehensive review.
  • Q2 2024 results: Q2 2024 NPAT-MI significantly rose by 52% YoY to VND77bn (USD3.0mn), which we attribute to (1) higher sales volume YoY and (2) gross margin expansion outweighing higher selling expenses YoY. We attribute higher sales volume to the improved reputation of DRC’s products in the US despite insignificant impacts from the US’ preliminary determination for the anti-dumping investigation on truck and bus tires exported from Thailand. On a QoQ basis, NPAT-MI jumped 57% due to (1) stronger sales volume from a low base in Q1 (i.e., Q1 historically records the lowest sales volume in a given year) and (2) gross margin expansion.
  • Profitability: Gross profit margin expanded 7.6 ppts YoY/3.5 ppts QoQ to 20.1% in Q2 2024. We attribute this improvement to the realization of lower-cost inventory procured in the previous quarters following the prices of raw materials cooling down after their peaks in 2022.

DRC’s Q2 2024 & H1 2024 results

VND bn

Q2 2024

QoQ

YoY

H1 2024

YoY

H1 2024 as % of 2024F

Net revenue

1,364

40%

17%

2,337

3%

48%

COGS

-1,090

34%

7%

-1,901

-6%

47%

Gross profit

274

70%

89%

436

68%

56%

Selling expenses

-158

82%

156%

-246

90%

67%

GA expenses

-23

26%

9%

-42

15%

54%

EBIT

93

64%

49%

149

56%

44%

Net financial income & net other income

5

175%

697%

6

N.M.

N.M.

PBT

97

68%

55%

156

69%

46%

NPAT-MI

77

57%

52%

127

66%

47%

Gross margin

20.1%

3.5 ppts

7.6 ppts

18.7%

7.2 ppts

 

EBIT margin

6.8%

1.0 ppts

1.4 ppts

6.4%

2.2 ppts

 

NPAT-MI margin

5.7%

0.6 ppts

1.3 ppts

5.4%

2.1 ppts

 

Source: DRC, Vietcap

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