X-Alpha | DCM 33,800 +6%: Past the seasonal peak

VALUATION VIEW

BSC recommends HOLD on DCM shares with a target price of VND 33,800/share, implying a total expected return of +4.7% (including a cash dividend of VND 2,000/share) versus the closing price on 07/10/2026. BSC applies a target EV/EBITDA of 5.0x (5-year median) to 2027F EBITDA of VND 2,394 bn, the year in which earnings return to a normal level after the peak, combined with adjusted net cash of VND 5,925 bn. Based on 2027F EBITDA, DCM is trading at around 5.1x, in line with the 5-year median, meaning the market has already priced in most of the earnings decline.

EARNINGS FORECAST

• BSC forecasts 2026 net revenue and NPAT-MI at VND 20,454 bn (+23% YoY) and VND 2,652 bn (+35% YoY), respectively, corresponding to EPS of VND 4,335/share, 2026F forward P/E of 7.9x and 2026F forward EV/EBITDA of 3.9x.
• In 2027, net revenue and NPAT-MI are forecast at VND 19,555 bn (-4% YoY) and VND 1,768 bn (-33% YoY), respectively, corresponding to EPS of VND 2,889/share. The earnings decline is due to:
  • (i) the 2027 average Middle East urea price expected at USD 450/ton (-15% YoY);
  • (ii) the 10% corporate income tax (CIT) incentive for the Fertilizer Plant ending, with the tax rate rising to 20%;
  • (iii) the input gas price assumed at USD 9.2/MMBTU, down only -11% YoY, a slower decline than that of urea prices.

COMPANY UPDATE

Business results update

Q2/2026 business results: Net revenue = VND 6,706 bn (+11% YoY, +27% QoQ), NPAT-MI = VND 1,065 bn (+35% YoY, +35% QoQ). Q2/2026 business results beat expectations:

• (i) Urea revenue reached VND 3,900 bn (+61% YoY) thanks to a +42% YoY higher average selling price and +129% YoY higher export volume;
• (ii) The negative was selling and general & administrative (SG&A) expenses, which rose to VND 972 bn (+119% YoY) due to the appropriation of VND 189 bn to the Science & Technology Development Fund.

On a 1H.2026 cumulative basis, net revenue and NPAT-MI reached VND 11,992/1,852 bn (+27%/+55% YoY), achieving 59%/70% of the full-year forecast.

Investment thesis update

• 2H.2026 growth slows: 2H.2026 net revenue is forecast at VND 8,461 bn (+18% YoY, vs. +27% YoY in 1H.2026). The gross profit margin is forecast to fall to 23.6% (-5.1 ppts vs. 1H.2026) as the urea selling price declines -8% vs. 1H.2026 while the input gas price is +24% YoY higher.
• 2027 earnings return to a normal level after the peak: 2027F NPAT-MI is forecast to fall -33% YoY, but remains 25% above the 2024 level. The change in the CIT rate alone reduces net profit after tax by about VND 220 bn.
• The new gas pricing formula provides medium-term support: DCM will be supplied additional gas from the Nam Du – U Minh field at a base price of USD 10.39/MMBTU, increasing 2.25%/year and decoupled from oil prices, with the first gas flow expected no later than Q4/2028.

RISKS

(1) World urea prices fall further than assumed: each VND 1,000/kg decrease in the urea selling price is equivalent to about VND 900 bn of gross profit;
(2) Oil prices and the exchange rate are higher than assumed, raising the input gas price, together with the year-end 2026 gas cost settlement;
(3) The NPK segment does not fill its capacity (2026F utilization estimated at 47%);
(4) Upside risk to forecasts: Middle East urea prices recover to around USD 500/ton. The positive scenario lifts the target price to VND 44,500/share.