- 2024-01-22T00:00:00
- Company Research
- DRC announced its 2023 results with net revenue of VND4.5tn (USD182mn; -8% YoY) and NPAT-MI of VND248bn (USD10mn; -19% YoY).
- 2023 revenue and NPAT-MI fulfilled 89% and 69% of our respective full-year forecasts. The lower-than-expected 2023 results were primarily because of our over-optimism about the domestic market rebound.
- For Q4 2023, net revenue was VND1.1tn (USD44.4mn; -2% YoY & -2% QoQ) and NPAT-MI was VND96bn (USD3.9mn; 19% YoY & 26% QoQ). Net revenue decline decelerated in Q4 2023 vs the -17% YoY growth in Q3 2023.
- We attribute the 2% YoY decrease in Q4 2023 revenue to the impact of economic headwinds on DRC’s domestic sales. On a QoQ basis, we attribute a 2% decrease in net revenue to lower demand for radial tires from overseas markets (-15% QoQ), partially offset by a solid rebound in bias tires sales both domestically and internationally (+ 49% QoQ).
- Gross profit margin improved 153 bps QoQ in Q4 2023. We attribute this improvement to lower input costs in Q4 2023, thanks to the realization of lower-cost inventory procured in the previous quarters. Another factor was the 21% QoQ surge in the total ASP, primarily attributable to a QoQ rebound in bias tires’ ASP of 13% and 19% for the domestic and export markets, respectively.
- DRC guides for earnings to surge in Q1 2024. The company expects revenue to increase 4% YoY in Q1 2024. In addition, DRC expects PBT to jump 90% YoY in Q1 2024. We believe the guidance reflects the company’s view on improvements in input costs and logistics expenses, coupled with strengthening pricing power. DRC’s actual revenue and PBT in Q4 2023 completed 92% and 188% of the company’s Q4 2023 guidance, respectively.
Figure 1: DRC’s 2023 results
VND bn | Q4 2022 | Q4 2023 | YoY | 2022 | 2023 | YoY | 2023 as % of 2023F | |
Net revenue | 1,114 | 1,097 | -2% | 4,899 | 4,495 | -8% | 89% | |
Gross profit | 177 | 202 | 14% | 811 | 651 | -20% | 78% | |
SG&A expenses | 65 | 85 | 31% | 395 | 340 | -14% | 105% | |
EBIT | 112 | 117 | 4% | 416 | 312 | -25% | 61% | |
Net financial income | -8 | 5 | -163% | -29 | -4 | -85% | 4% | |
PBT | 104 | 122 | 17% | 386 | 307 | -21% | 68% | |
NPAT-MI | 81 | 96 | 19% | 307 | 248 | -19% | 69% | |
Gross margin | 15.9% | 18.4% |
| 16.6% | 14.5% |
|
| |
EBIT margin | 10.1% | 10.6% |
| 8.5% | 6.9% |
|
| |
NPAT-MI margin | 7.2% | 8.7% |
| 6.3% | 5.5% |
|
| |
Source: DRC, Vietcap forecast
Figure 2: DRC’s Q1 2024 guidance
VND bn | Q1 2023A | Q1 2024G | YoY |
Revenue | 1,113 | 1,160 | 4% |
PBT | 29 | 55 | 90% |
Source: DRC, Vietcap forecast
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