Investment Recommendation

DRC_BUY_TP 40,000_Upside 25%_Keep Rolling_BSC Company Update

Date

28/04/2022
Language

Tiếng Việt
Number of Downloads

124

Detailed report

VALUATION

We recommend BUY for DRC shares with a target price of VND 40,000 defined by the P/E valuation method with the 2022 target P/E = 12.5x to shine (1) Strong growth in profitability in 2022 comes from very large demand and attractive selling prices and (2) Long-term growth prospects with Radial 3 factory It will be fully operational from 2024.

FORECAST BUSINESS RESULTS

The BSC forecasts drc wood business results in 2022 as follows:

In 2022: Net revenue and profit after tax- noncontrolling interests reached VND 5,012 billion (+14.4% YoY) and VND 377 billion (+29.5% YoY), EPS FW2022 = 3,172 VND/ SHARE, respectively, corresponding to P/E FW2022 = 10. 1x.
Key assumptions for DRC business results include (1) Good growth in DRC product consumption: Radial +18% YoY, Bias +5% YoY, (2) Average selling price of products slightly increased +3% YoY and (3) Gross margin increased by 40 bps, reaching 17.5%.

INVESTMENT OUTLOOK

Output continued to grow strongly thanks to (1) good market demand, (2) taking advantage of competition and (3) improved adverse conditions.
Gross margin continues the upward trend, reaching 17.5% (+40 bps vs 2021)

RISK

The price of raw materials, especially rubber, rose more sharply than expected.

BUSINESS UPDATE

In 2021, DRC recorded net revenue and profit after tax reaching VND 4,380 billion (+20.1% YoY) and VND291 billion (+13.4% YoY) respectively thanks to the growth of all types of products.