DPM - Steadily Moving Forward
We value DPM shares using a 50/50 blend of two valuation methodologies: Discounted Cash Flow (DCF) and P/B comparable. Our 12-month target price for DPM is VND 24,600/share, implying a forward P/B of 1.43x/1.40x for 2025-2026DPM is currently Vietnam’s leading urea fertilizer producer, commanding an average domestic urea market share of 38%. We forecast DPM’s NPAT-MI to surge 132% YoY in 2025 and maintaining a stable 5% CAGR for 2026–2029, driven by rising urea selling prices.
• DPM’s growth outlook and key risks revolve around urea selling prices, while production volumes are expected to remain stable. In periods of rising urea prices, not only does the urea segment deliver strong performance, but the chemicals and trading segments also benefit from spillover effects, as selling prices of related products such as NH3 (ammonia) and traded fertilizers (potash, DAP) move in sync with urea price trends.
• Volume upside is driven by the NPK segment through intensified brand- and product- focused marketing campaigns.
• Medium- to long-term fertilizer price forecasting is challenging due to global economic and geopolitical volatility. In our base-case scenario, we assume urea prices will grow at a CAGR of 1.5% from 2025 to 2029.
• Additionally, DPM stands out for its consistent annual dividend policy and high payout ratio, supported by a substantial cash accumulated over the years and recurring financial income from the positive spread between low borrowing costs and deposit rates. Retained earnings and various funds currently account for 42% of equity, representing a potential dividend source if DPM decides to pay dividends at a high ratio in accordance with the spirit of Government Resolution 167/2024/NQ-CP on dividend payments by state-owned enterprises.
Risks to our call
In our base-case scenario, we expect urea demand from China and India to ease again in 2026. At the same time, urea selling prices are likely to have peaked and may gradually decline after Q1 2026 as the winter season ends and oil remains at an average of USD 65 per barrel through 2026. A strong deviation from the base case scenario, either in terms of demand or costs, could significantly impact the company's profit margins and, consequently, the short-term valuation of its stock.
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