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DGC - Yellow phosphorus and fertilizers are short-term growth drivers

Q3 and FY2025 outlook: Key business segments are expected to continue favorably, DGC flexibly transforms product structure
Given the favorable development of the yellow phosphorus and fertilizer markets, we expect DGC's Q3 business results will remain favorable in line with the Company's current plan, with revenue and profit after tax reaching VND 2,900 billion (+13.6% YoY; +0.4% QoQ) and VND 875 billion (+24% YoY; +2.5% QoQ), respectively. Concrete:
• Yellow phosphorus and TPA segment: Net revenue is estimated at VND1,300 billion (+4.2% YoY; +3.2% QoQ) and VND260 billion (-22% YoY; -24.9% QoQ), respectively, thanks to stable demand from the semiconductor industry. Fertilizer segment: Fertilizer revenue is estimated at VND 1,064 billion (+76.6% YoY; +32% QoQ), supported by: 1/ New VAT law and 2/ low supply from China. Other segments: Revenue from animal feed additives is expected to decrease slightly due to African cholera. Other chemical segments (detergents, detergents, other chemicals, etc.) grew slightly while the alcohol and battery segments remained stable.
• Gross margin: Gross profit margin continued to remain at 34% - corresponding to gross profit of VND 1,922 billion (+11.8% YoY; +0.4% QoQ). The ratio of insurance and management expenses/revenue remained at 4.5%, thereby profit from operating activities reached VND 820 billion (25.1% YoY; 0.4% QoQ). In summary, the Company's profit after tax in Q3/2025 is expected to reach VND 875 billion (+24% YoY; +2.5% QoQ).
For the full year 2025, we raise DGC's revenue forecast to VND 11,200 billion (+13.5% YoY), due to the adjusted growth in DAP and MAP manure prices to 20% YoY (compared to 10% YoY previously). The NPAT-MI is estimated to reach VND 3,358 billion (+13% YoY, higher than the initial report’s estimate of VND 3,170 billion) – equivalent to 120% of the Group's plan.
Valuation and Recommendations
Given its large position in the domestic chemical industry, favorable sales and new projects coming into operation, we believe that DGC will continue to maintain positive business results in the near future. Using a combination of P/E and P/B valuation with a 50:50 ratio, we offer a target price for DGC of VND 109,600 per share. Based on the 03/09/2025 closing price of 97,600, we recommend ACCUMULATE for DGC.