Analyst Pin-board: DRC – 3Q2020 Results update
After poor results in 2Q2020 due to the effect of Covid-19, DRC recovered in 3Q2020. However, the increasingly competitive level of the industry made selling prices of key products such as radial tires and bias tires drop. At the same time, selling expenses also increased to maintain market share. Therefore, we expect that 2020 revenue and profit of the company will decline compared to 2019. In contrast, 2021 results are expected to be better due to the increase of exports and reduced depreciation costs. Currently, the stock is trading at a P/E trailing of 10.4x, lower than the 2019 P/E of 11.2x. Investors, in 2020, expected strong revenue growth because of increased exports to the US. However, considering the factors of competition and increasing expenses, we believe that the current price level is no longer attractive. We value DRC share at VND 20,900/share, coupled with the expected cash dividend of VND 1,500/share in the next 12 months, the total profitability is 12%. We recommend to ACCUMULATE this stock.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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