DGC_NEUTRAL_TP 43,200 VND_Upside 11%_On the way up_BSC Initial report

Valuation
We recommend NEUTRAL on DGC stock with the target price of VND 43,200 per share, equivalent to the upside of 11% based on two approach FCFF and P/E with the proportion of 60/40. Although DGC has a lot of positive factors in FY 2020, a recently rally in stock price made the stock not very attractive. 
BSC’s FY 2020 Bussiness Forecast
BSC forecast revenue and profit after tax of VND 6,282 bn (+23.4% YoY) and VND 842 bn (+47.4% YoY). EPS forward 2020 is VND 6,121 per share, P/W forward is 6.4. 
FY 2020 Bussiness Plan
The company set the target of revenue and profit after tax of VND 6,084 bn (+19.5% YoY) and VND 600 bn (+5.1% YoY). However, in 2020 AGM, Board of directors comments that profit plan may increase to VND 700 bn (+22.5% YoY).
Catalyst                       
•    DGC plan to list on HOSE in June 2020
•    Vinachem continue to divest from DGC in 2020
Investment themes
(1) Leading enterprise with a complete value chain operating in an industry whose barrier of entry is high
(2) FY 2020 business activities are supported by recovering demand and increasing gross profit margin.
Investment risks
(1) High policy risk due to increasing social concerns about environmental impacts.
(2) Risks related to Duc Giang – Nghi Son Chemical Complex Project
(3) Fertilizer faces fierce competition in exporting markets (particularly India)