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Title DPM - BUY - TP 23,030 - New wave for green race
Report Type Phân tích công ty
Source BSC
Bussiness DPM
Detail Date : 11/03/2021
Total pages : 9
Language : English
File Type : .PDF
FileSize : 498 Kb
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Short Content

 

VALUATION

We maintain our BUY recommendation for DPM and raise our target price to VND 23,030/share, 20.6% upside from the price on 10/03/2021, based on the DCF and P/E method (50%/50%). ) due to changes in the following assumptions (i) Adjustment of FO oil prices and urea prices, based on 2M/2021 movements; (ii) Sales volume decreased (-4.5%YoY) due to maintenance plan in Q2/2021; (iii) Target P/E adjusted to 11.8x, based on industry median of 11.7x and 3-year median P/E of 11.8x.

FORECAST OF BUSINESS RESULTS

BSC forecasts DPM’s revenue and NPAT of VND 9,846 billion (+26.9% YoY) and VND 865 billion (+24.7% YoY), respectively. EPS fw = VND 1,942 and P/E fw= 9.8, P/B fw =0.98.

INVESTMENT THESIS

§   Improved gross profit margin thanks to the expectation that selling price will increase faster than input material price - Due to high oil price and maintaining positive signal from fertilizer demand in 2021.  

§   Tracking factors not included in our valuation:

(i)             Recognition of abnormal profits from insurance claims;

(ii)            Expectation of tax refund when the tax law is revised in 2021.

TECHNICAL VIEW

Investors can buy the stock with the target price located around 21.5, consider to stop loss if the support level 17 is penetrated.

RISKS

§  Input gas price increased faster than forecast and adjusted selling price was lower than expected;

§  Performance of plants is lower than expected due to routine maintenance.

COMPANY UPDATE

§  Revenue and NPAT in 2020 will reach VND 7,762 billion (+1% yoy) and VND 693 billion (+83% yoy), respectively, thanks to a sharp drop in input gas prices and high demand for fertilizer export. In addition, DPM also received an unusual profit from insurance of 90 billion/200 billion in Q4/2020

DPM sets a conservative plan for 2021: DTT = 8,331 billion VND, EAT = 365 billion VND, converted urea output is only 770 thousand tons, due to the periodic maintenance plan in Q2/2021.