DRC – A negative surprise from an uncertain selling volume trajectory
- On Mar 21st 2023, the Brazilian government rose import tariffs of truck tires from 0% to 16% after receiving the demand from Brazilian tire producers in Oct-2022. Brazil accounts for 60% of global DRC exports, equivalent to 36% of total 2022 revenue. We see a downside risk to 2023 exported sales growth.
- 2023 business targets with net sales and net profit of VND5,060 bn (+3% YoY) and VND264 bn (-14% YoY), respectively. We see a signal of uncertain selling volume trajectory as well as a negative surprise from double-digit negative profit growth.
- We view the higher tariff from Brazil and DRC’s 2023 conservative business plan as a downside risk to the outlook for DRC. As a result, we adjust down our forecast for 2023 revenue and net profit to VND5,053 bn (+3.2% YoY) and VND265 bn (-14% YoY), respectively. 2023 EPS was calculated to be VND2,095 (-14% YoY).
- Our new target price for DRC is VND22,600, adding a VND1,300 cash dividend, the 12-months expected return is 8.6% compared to the closing price on Apr 11st 2023, equivalent to a NEUTRAL
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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