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Analyst Pin-board DPM – 2021: Rising oil prices to be the largest headwind

The outstanding 2020 performance was a result of the tumble in natural gas prices, causing a sharp decline in input costs. Such results were in line with our forecast. Looking into 2021, rise in fertilizer prices may not be large enough to offset the strong increase in natural gas costs, which are driven by a surge in oil prices. Some sales have been delayed from 4Q2020 into 1Q2021 to take advantage of high fertilizer selling prices. We remain cautious on DPM’s 2021 outlook as mentioned in our latest report. In the long-term, we maintain our view that DPM has not much growth potential. Instead, it is merely a dividend payer with cash dividend stable at VND 700-1,000/share, equivalent to a dividend yield of 4%-5.8% at the current stock price. Thus, we keep our target price for DPM at VND 17,100/share. We expect a cash dividend of VND 1,000/share in the next 12 months. The total return is 5%, based on the closing price of February 24^th, 2021. We have a NEUTRAL view on this stock.