DGC_TP 115,000_Upside 19__Update business results for the first 6 months_BSC_Vietnam company update

Valuation

§  We maintain our BUY recommendation for DGC with a 2021 target price of VND115,000, +19% from the closing price of July 26 of VND92,400 due to adjusted business forecast (core segment) of 2021 (+24% compared to the latest forecast) and 2022 (+32% compared to the latest forecast) due to an upward adjustment in the selling prices of export products (WPA + 35%, DAP +40%) when world prices rise.

Forecast of business results                                                

§  BSC forecasts that revenue and profit after tax (core business) in 2021 will reach VND 8,231 billion (+32% YoY) and VND 1,481 billion (+56% YoY). EPS FW 2021 = VND 8,414, PE FW 2021 = 11.6 times, equivalent to the industry median P/E. 

§  BSC forecasts RNAV value of 44 Duc Giang Real Estate Project to be VND 352 billion.

Risks                                                

§  Policy risks related to the environment

Company update

§  Business results in the second quarter continued to grow strongly. Revenue and profit after tax reached VND 2,038 billion (+29% YoY) and VND 333 billion (+24% YoY), respectively. Accumulating 6 months, revenue and profit after tax reached VND 3,987 billion (+28% YoY) and VND 625 billion (+33% YoY).

§  Revenue in 6 months by product: Yellow phosphorus: VND 1,666 billion (+11% revenue, +16% output), WPA: VND 520 billion (+39% revenue, -8% output), H₃PO₄: 472 billion (+56% revenue, +51% output), DAP: VND 502 billion (same period did not record revenue), MAP: VND 202 billion (-49% YoY, -55% output).