X-Alpha | DHC 51,400 +29%: Giao Long 3 Plant groundbreaking marks a turning point for long-term growth

VALUATION VIEW

In our previous report, we selected a conservative scenario in which DHC did not have the Giao Long 3 factory, with a target price of VND 37,600/share. However, the company commenced construction of this factory in January 2026, corresponding to a target price of VND 43,300/share. In addition, BSC raises the target price by 19% to VND 51,400/share due to:

• A new target P/E of 12.6x, the 2017–2021 average, compared with 11.9x in our previous report. Giao Long 2 factory commenced construction in Q4/2017. At present, DHC shares similar characteristics, with Giao Long 3 already under construction and demand exceeding supply.
• A 1.8-ppt increase in our gross margin assumption for 2026–2027.

We maintain our BUY recommendation on DHC with a target price of VND 51,400/share, implying an upside of 29% based on the reference price on February 26, 2026.

 

2026 BUSINESS OUTLOOK UPDATE

1. Supply growth may return to 5%–10%, but this remains insufficient to offset the 22% capacity reduction in 2025.

2. Company outlook:

• DHC’s gross margin is expected to recover in line with the overall industry and reach 16.8%–16.0% in 2026–2027, the highest level in the past five years during 2021–2025.
• Giao Long 3 factory is expected to come into operation from 2028, doubling capacity, shifting toward higher-value-added products, and strengthening the company’s market position.

 

EARNINGS FORECAST

2026 revenue is forecast to reach VND 3,842 billion (+5.7% YoY), with testliner paper revenue increasing by 4.5% YoY and paper packaging revenue rising by 11% YoY.

2026 NPAT-MI is forecast to reach VND 404 billion (+3% YoY), supported by balanced supply and demand and gross margin remaining high at 16.8%.

2027 revenue and NPAT-MI are forecast to reach VND 3,842 billion (+3.5% YoY) and VND 419 billion (+4% YoY), respectively, with the paper packaging factory operating at full capacity, up 5 ppts.

 

Changes to 2026 Forecasts Compared with Our Previous Report

The closure of polluting paper production facilities in Phong Khe has had a stronger impact than BSC expected. Full-year 2025 gross margin reached 16.2%, compared with our full-year forecast of 15.2%, and showed signs of remaining at 17%–18% in Q1/2026. BSC raises its 2026 gross margin assumption from 15.0% to 16.8%, corresponding to a 13% upward revision to 2026 NPAT-MI compared with our previous report, reflecting the medium-term situation in which demand for packaging paper is exceeding supply.