DCM – 2024 fully depreciated urea plant drives earnings growth
- We project the revenue and MPAT-MI in 2024 to reach VND 14,470 billion (USD 603 million) and VND 1,622 billion (USD 68 million) respectively, marking a 15% YoY increase in revenue and a significant 46% YoY surge in NPAT. The NPK segment is expected to be a revenue growth driver after the merger with the NPK Han-Viet plant, while the fully depreciated urea plant will stimulate profit growth in 2024.
- At a projected 2024 EPS of VND 3,064, DCM shares trade at a forward PE of 11.6x, higher than the 5-year average of 10.1x, showing that the current share price reflects the prospects of increasing business profits in 2024.
- In 2024, it is expected that the amended VAT law (imposing a 5% VAT on fertilizer products) will be implemented at the conference for review and comment at the 7th meeting (May-2024), and approved at the 8th meeting (Oct-2024). If the Law is passed with fertilizer products moving from non-taxable to 5% VAT, we expect domestic fertilizer producers will be able to compete with imported products thanks to lower costs.
- However, the intention of including fertilizer products into VAT’s item list has been considered at many National Assembly session but has not yet approved. Therefore, we do not yet include this factor in our assumptions for forcasting the business’s results. We will re-evaluate when we have more information after the 7th session of the National Assembly
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