- DCM announced weak Q3 2023 results with revenue of VND3,011bn (USD123.4mn; -9% YoY) and NPAT-MI of only VND74bn (USD3.0mn; -90% YoY).

- On a QoQ basis, Q3 2023 NPAT-MI fell 76%, which we mainly attribute to 1) a 2% lower estimated urea average selling price (ASP) QoQ and 2) sales & marketing expenses nearly doubling QoQ. Regarding the first reason, we believe the weak urea ASP in Q3 is mainly due to the low export price. We estimate DCM’s Q3 urea ASP to be USD372/tonne and its export price to be roughly 20% lower than its domestic price. In Q3 2023, total urea sales volume increased 5% QoQ & 20% YoY with domestic volume falling 21% QoQ and export volume nearly doubling QoQ. We note that Q3 is usually the low season of urea consumption in the domestic market. These factors led to the urea segment’s gross profit margin compressing to 10.0% in Q3 vs 16.2% in Q2. Furthermore, DCM’s sales & marketing expenses nearly doubled QoQ due to 1) the company carrying out promotional campaigns and 2) higher selling expenses caused by increased export sales volume.

- In 9M 2023, DCM recorded revenue of VND9,036bn (USD370.3mn; -21% YoY) and NPAT-MI of VND614bn (USD25.5mn; -81% YoY). The sharp decline in NPAT-MI was caused by estimated urea ASP declining 36% YoY and estimated input gas costs increasing 5% YoY, outweighing urea sales volume rising 8% YoY.

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