Analyst Pin-board DRC – Strong sales growth offsets significant increase in input costs
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· In Q2 2022, DRC recorded net sales of VND1,148 bn (or USD 49 mn, -10.6% QoQ; -4.7% YoY), of which, domestic market posted a negative growth. Although DRC raised the average selling price (ASP) by over +15% YoY during Mar-2021 and Jun-2022, it could only pass a part of increasing production costs to customers, resulting in 2Q2022 net profit of VND84 bn (or USD 3.6 mn, -27.3 %QoQ; -20.8% YoY). · We expect 2022 sales will grow by +17.5% YoY to VND5,147 bn (or USD 220 mn), supported by increasing tire consumption in both overseas after two-year disruption because of the Covid-19 pandemic. Equipped by expected downward adjustment of input prices compared to 1H2022, 2022 net profit is expected to reach VND306 bn (or USD 13.1 mn, +5.1% YoY). · Using a combination of FCFF and PER, we arrive at a target price of VND34,700 in the next 12 months. Adding a cash dividend of VND1,200, the 12-months expected return is +32% compared to the closing price on July 26th. Therefore, we recommend to BUY this stock. |
Danang Rubber Joint Stock Company is a Vietnam-based company engaged in the rubber processing sector. It manufactures, trades, imports and exports rubber tires, inner tubes and other deprived products for automobiles, motorbikes and bicycles. It also manufactures other rubber products for mechanical uses, as well as trades materials and supplies for the rubber industry. The Company is involved in the offering of installation services of machinery and equipment for rubber processing activities.
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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