X-Stock | DRC 14,000 +16%: Q1 2026 Earnings Update - Provision Accruals Weighed on Short-Term Net Profit

EARNINGS UPDATE

Q1/2026 results: Net revenue reached VND 1,155 billion (-2% YoY, -5% QoQ), while NPAT-MI reached VND 16 billion (+71% YoY, -59% QoQ)

• Gross margin reached 16.1% (+5.0 ppts YoY, -2.5 ppts QoQ). Gross margin improved by 5.0 ppts YoY, benefiting from the downtrend in input rubber prices (-9% YoY). However, compared with the previous quarter, gross margin came under adjustment pressure, declining by 2.5 ppts, mainly due to a 3% QoQ decrease in the average selling price of radial tires.
• Selling and G&A expenses reached VND 159 billion (+43% YoY, -1% QoQ), equivalent to 13.7% of net revenue (+4.4 ppts YoY, +0.5 ppts QoQ). The increase in operating expenses was mainly due to: (i) G&A expenses surging by 458% YoY to VND 100 billion, driven by the recognition of a provision for overdue receivables from a major customer worth VND 84.9 billion, recorded under other G&A expenses; although this was partly offset by (ii) selling expenses declining by 36% YoY to VND 59 billion.
•  Financial activities: Net financial expenses reached VND 10 billion (+11% YoY, -20% QoQ). In particular, financial income reached VND 10 billion (+13% YoY), while financial expenses reached VND 19 billion (+12% YoY), with interest expenses recorded at VND 12 billion (+25% YoY).

BSC’S ASSESSMENT

•  Q1/2026 earnings were below BSC’s expectations. Although net revenue and gross profit were relatively close to our forecasts, actual NPAT-MI was significantly lower due to G&A expenses exceeding our estimate by around 250%, equivalent to an additional VND 60 billion. By the end of Q1/2026, DRC had completed 22% of our previous full-year revenue forecast and 9% of our previous full-year net profit forecast. Excluding the extraordinary provision, Q1 NPAT-MI is estimated at VND 76 billion, up 92% QoQ.
• Forecast revision: Due to pressure from the provision for overdue receivables affecting net profit, BSC revises down its 2026 earnings forecast in this report. Please refer to the 2026 forecast section on page 4 for further details.
•  Other notable information: Assessment of receivables quality and cash flow on page 2; 2026 AGM update on page 3; and 2026 earnings forecast on page 4.