DGC Flash Note – NEUTRAL

DUC GIANG CHEMICALS GROUP JSC (DGC VN)

DGC announced Q2/2025 business results with NPAT reaching VND890 billion (+2.3% YoY and +6.5% QoQ), in line with our expectations. For 6M2025, cumulative NPAT increased by 9.1% to VND1,727 billion, fulfilling 57.6% of its full-year target and 51.5% of our forecast.

In Q2/2025, DGC recorded revenue of VND2,894 billion (+15.6% YoY) and NPAT of VND 890 billion (+2.3% YoY). Revenue growth was driven by: (1) selling prices of DAP/MAP fertilizers increasing an estimated 20% YoY, (2) P4 output rising by an estimated 21% YoY, and (3) P4 selling prices increasing slightly by 2.9% YoY. However, gross profit declined slightly by 0.2% YoY, with the gross margin decreasing to 33.9% from 39.2% in the same period last year due to:

• Domestic supply of Apatite ore (input material) being scarce and of lower quality,
• Input electricity prices (accounting for 25–30% of total COGS) increasing by 4.8% in October 2024 and another 4.5% in May 2025,
• Sulfuric acid prices (input for fertilizer and animal feed production) estimated to have surged by 82.7% YoY.

As a result, the slight NPAT increase did not come from gross profit but was mainly due to a 23.9% YoY reduction in SG&A expenses. Lower transportation costs partly contributed to this performance.

For 6M2025, net revenue reached VND5,704 billion (+16.7% YoY) and NPAT was VND1,727 billion (+9.1% YoY). DGC continues to pursue the same strategy as in 2024, focusing on increasing P4 and fertilizer output, aligned with the context of China suspending DAP/MAP fertilizer exports from December 1, 2024. High DAP/MAP prices were key positive factors supporting the 6M2025 results.

Outlook

Input electricity prices are expected to continue rising gradually. Meanwhile, P4 prices are unlikely to increase significantly due to potential production expansion in China (currently operating at only 50% P4 capacity) and declining input production costs. For 2025, we maintain our forecast for DGC’s revenue at VND11,388 billion (+15.4% YoY) and NPAT at VND3,353 billion (+7.8% YoY), supported by the expectation that DAP/MAP fertilizer prices will remain high and that input VAT deductions for fertilizers will help offset rising electricity costs. Using the discounted cash flow method, we value DGC at VND108,400/ share by the end of 2025, implying a total return of 5.4%. However, in the medium to long term (2026F–2028F), DGC may benefit from the Nghi Son caustic soda project and its real estate development plans.