Flashnote
31 March 2025
DGC is seeking a five-year extension for its apatite ore exploration license at Mining No. 25/19, which is expected to have approval in 2H25. Currently, internal ore meets 80-85% of demand, with the rest sourced externally, including Egyptian imports with competitive prices. However, Egyptian apatite's quality is more appropriate for fertilizers, not P4. Therefore, extending the exploration license is crucial for DGC's long-term access to suitable ore. Additionally, DGC aims to participate in auctions for other mining areas, like No. 23/22/20.
The company is also actively pursuing the development of its Bauxite mine in Dak Nong province, which is currently receiving robust support from the provincial authorities, although certain procedural requirements remain to be fulfilled prior to final approval. Regarding the real estate project, DGC management has set targets of VND5tn in revenue and VND1tn in net profit upon project completion. We haven’t incorporated the Bauxite and Real estate projects into our earnings model, leaving a potential upside to our earnings forecasts in the long run.
Maintain Buy, TP and estimates
DGC management indicated that they foresee no significant increase in export tariffs beyond the existing 5% on P4 products from Vietnam in the coming time. They are also aware of potential US tariffs on global and Vietnamese goods to be announced on 2 April, which could impact DGC. However, their minimal US market exposure mitigates direct risk.
At the AGM, shareholders also approved the FY25 dividend policy at 30% of par, either in stock or cash. At this stage, we assume FY25 dividend would be paid in cash at VND3,000/share, implying a 3% dividend yield.
We maintain our FY25 earnings forecast at this stage, calling for 13% y/y growth in net profit to VND3.5tn on net sales of VND13tn, up 32% y/y. DGC is trading on 1-yr rolling fwd P/E of 11.3x, vs. its 4Y of 9.0x. Meanwhile, compared to regional peers, DGC is trading on FY25 P/E of 11.7x, discount vs. a median of 14.0x. We maintain our Buy rating on DGC with an unchanged TP of VND133,000 (upside 29%).
Financial statements and key data
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Explanation of Institutional Equity Research Ratings
Buy: Expected to rise by more than 20% on an absolute basis in the next 12 months
Add: Expected to rise by between 5% and 20% on an absolute basis in the next 12 months
Hold: Expected to rise or decline by less than 5% on an absolute basis in the next 12 months
Reduce: Expected to decline by between 5% and 20% on an absolute basis in the next 12 months
Sell: Expected to decline by more than 20% on an absolute basis in the next 12 months
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