- We lower our target price (TP) for DGC by 6% but reiterate our BUY rating as its share price has dropped 18% in the last three months amid market correction. Our lower TP reflects a 7% cut p.a. in our 2025F/26F EBITDA forecasts.

- We lower our respective 2025F/26F/27F NPAT-MI projections by 13%/8%/11%, driven by 1) 41%/38% reduction in our aggregate 2025F-2028F revenue forecasts for the ethanol and battery segments amid slower-than-expected customer base growth, and 2) 0.3/0.3/1.8 ppts reductions in our 2025F/26F/27F GPM forecasts, as we assume a higher amount of raw ore needed to produce one tonne of P4, as indicated by DGC in its 2025 AGM.

- DGC’ valuation looks attractive with 2025F/26F EV/EBITDA of 6.7x/5.8x, respectively, offering 27%/37% discount compared to its 10-year average EV/EBITDA of 9.0x. Our projected 2024-2027F core EBITDA (excl. real estate) CAGR is 10%, with reported EBITDA CAGR is 13%.

- Risks to our positive view: Stronger-than-expected compression in market price spreads, delays in the chlor-alkali project, and unfavorable changes in phosphorus export policies.

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