We attended DCM’s Analyst Meeting, where management is confident in their 10% p.a. revenue growth target in 2026-30F, to be achieved through (1) scaling the NPK segment which has huge headroom, (2) increasing urea plant installed capacity by 25% to 125%, (3) expanding fertilizer trading, (4) diversifying into industrial gasses, chemicals, crop cultivation, and agri-processing, and (5) M&A.  

We see insignificant changes to our 2025F reported NPAT-MI forecast (VND1,688bn, +19% YoY), pending a fuller review. Over the long term, potential stronger-than-expected urea prices could offset higher-than-expected gas prices. We currently have a BUY rating for DCM with a target price of VND38,700/share.

* Strong Q2 preliminary results: 

• Revenue was VND6.2tn (+60% YoY) and reported PBT was VND600bn (-2% YoY vs reported, +37% YoY vs core). Strong Q2 PBT growth to be driven by (1) 23%/30% YoY urea/NPK sales volume growth, (2) what we estimate as a 7% YoY urea ASP increase (~VND10,250/kg), and (3) 14% YoY lower gas prices. 
• H1 revenue and PBT complete 63%/56% of our respective full-year forecasts. H1 urea sales volume and ASP complete 60%/104% of our 2025F forecasts, broadly in line with our expectations. The H1 average gas price was USD8.8/MMBT, ~102% of 2025F our forecast and aligning with our projection.
• Q2 urea sales volume was 236,350 tonnes (+23% YoY), mainly driven by 20% YoY higher export volume while domestic volume slightly declined 1% YoY. 
• Q2 NPK sales volume (excl. KVF) was 93,020 tonnes (+30% YoY), continuing to gain market share.  H1 NPK sales volume completes 41% of our 2025F forecast. 

Management also shared a positive urea price outlook for 2025–30F, consistent with DPM’s view. Key drivers include: (1) organic demand growth from rising agricultural output, (2) surging demand from Cambodia, where cultivated areas are expected to double, (3) China’s coal-based urea plant shutdown due to ESG compliance, and (4) limited new global capacity expansion.

DCM to sign new gas purchase agreement with Vietnam Industrial Energy Group (VIEG) for 2028-47F, with new pricing to add USD1/MMBTU for volume purchased from both VIEG and Petronas, marked at 46%*MFO + USD1/MMBTU and 13%*Brent + USD1/MMBTU, respectively. The weighting has not yet been disclosed. This new pricing structure is USD1/MMBTU higher than our current forecast.  Despite the increase, DCM considers this rate competitive vs other new domestic gas sources such as Block B, Nam Du–U Minh, and Khanh My – Dam Doi.

DCM sees substantial headroom to grow its NPK market share, supported by the industry’s ongoing shift to single-nutrient fertilizers - NPK products. In 2024, DCM (including KVF) held ~7% of Vietnam’s NPK market, but could reach ~17% if operating at full capacity. Management targets full KVF utilization by 2027–28F, focusing on customer bases in the southeast, central highlands, and northern areas of Vietnam. Additionally, DCM plans to expand NPK exports to Cambodia, from the current 20,000 tonnes/year.

Continuing market share expansion:   DCM is also increasing its urea market share in southwest Vietnam from 61% to 72%, and has opened a Cambodia representative office, currently capturing ~40% market share in urea and preparing to enter the NPK segment.

Ongoing capex disbursement to optimize and diversify business operations:

• The Nhon Trach plant and port project (VND3.4tn total capex) with a production capacity of 150k tonnes of other fertilizers and 450k tonnes of handling, is set to (1) enhance inventory capacity for immediate demand fulfillment, (2) cut logistics costs, and (3) provide port services for vessels up to 45,000 tonnes.
• Industrial gas and chemicals: capex of USD200mn, expected revenue of VND5-6tn, processing and collecting N2, O2, Ar, H2, and CO2. 
• Binh Dinh warehouse is operational and successfully capturing demand in the central region. A new 50,000-tonne NPK plant is also planned to serve local markets.

Powered by Froala Editor