X-Alpha | DPM VND35,000 +19%: Earnings Inflection from a Global Supply Shock

VALUATION VIEW

BSC upgrades its recommendation on DPM to BUY, with a target price of VND35,000/share. The target price is derived using the EV/EBITDA method, with a 2026F target multiple of 5.7x, equivalent to the 10-year median for 2016–2025. The new target price implies an expected total return of 19% and is 25% higher than our previous report, driven by a 61% upward revision to 2026F NPAT-MI after we significantly raised our average selling price assumptions.

EARNINGS FORECAST

• BSC forecasts 2026 net revenue and NPAT-MI at VND19,065bn, up 17% YoY, and VND1,509bn, up 41% YoY, respectively. This corresponds to EPS of VND2,433/share, a 2026F forward P/E of 12.7x, and a 2026F forward EV/EBITDA of 4.9x.
• Compared with our latest update report, our revenue and NPAT-MI forecasts have been revised up by 19.7% and 61%, respectively, mainly due to: (1) a 5% upward revision to the average urea selling price assumption versus our previous forecast; and (2) a sharp improvement in gross margin from 16% to 20%, as ASP growth is expected to outpace the increase in input gas costs.

COMPANY UPDATE

Business Results Update

4Q2025 results: Net revenue reached VND4,528bn, up 7% YoY and 52% QoQ, while NPAT-MI reached VND390bn, up 38% YoY and 19% QoQ. DPM’s 4Q2025 results were in line with BSC’s forecast, with: (i) actual gross margin performing better than expected, offsetting (ii) elevated G&A expenses, mainly from management personnel costs and welfare fund provisions.

VNPOLY Update: The obligation has been identified and incorporated into our forecast.

Investment Thesis Update: Please refer to our latest report for further details.

• We reverse our previous view and raise our 2026 average urea price forecast by 10%–15% YoY. Our view shifts from “earnings peaking in 2025” to a continued growth scenario, supported by: (i) supply disruption at the Strait of Hormuz, together with insurance-related constraints; (ii) China tightening urea exports until end-August 2026; and (iii) a 2mn-tonne supply deficit in India.
• Margin expansion and full-year benefits from tax policy: Gross profit is expected to improve as the increase in selling prices outpaces the rise in input gas prices. In addition, the full-year application of the 5% VAT policy should help reduce production costs by 5%–7%.

RISKS

(1) Sales volume and average selling prices come in lower than expected; regulatory intervention pressure;

(2) Higher input gas prices due to FX volatility and rising oil prices;

(3) Upside risk to our forecast: geopolitical conflicts become more prolonged and/or more severe.