DRC – Leaving difficulties behinds, heading for more prosperous landscape in Q4-FY23 and FY24
- In Q4-2023, we expect DRC's net margin will be constant at 0% (+17 bps QoQ) attributes to the decreasing of raw material price. For 2023, we project DRC's net revenue and NPAT to gain VND 4,580 bn (or USD 192 mn, -6.5% YoY) and VND 235 bn (or USD9.8 mn, -23.8% YoY), resulting in an EPS of VND 1,857.
- In 2024, we project that the company's net revenue and NPAT will reach VND 5,276 bn (or USD 221 mn, +15.2% YoY) and VND 277 bn (or USD 11.6 mn, +17.9% YoY), respectively, resulting in an EPS of VND 2,189. It is driven by (1) lifting the capacity of production from its phase-3 radial factory, (2) higher sales in the US as Thailand tires is in the risk of being anti-dumping duties imposed by US ICT & DOC from Q1-2024, (3) the more active public investment & trading activities globally, (4) GPM will maintain at a satisfactory level by ending up the situation of Chinese & FDI corporate’s destocking & the favorable condition from its materials.
- We determine a one-year target price for DRC at VND 25,300/share, based on two methods: FCFF and P/E, with respective weights of 50% and 50%. Hence, we recommend that investors consider accumulating shares for DRC stock when the market undergoes a significant correction at a reasonable price.
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