- We increase our target price (TP) for DCM by 5.2% to VND40,700/share and maintain our BUY rating. This is driven by our 3.6% higher aggregate 2025-2029F NPAT-MI forecast (respective changes of +1.9%/+5.8%/+12.0%/-2.1%/+0.5% for 2025/26/27/28/29F).
- Our higher aggregate 2025-29F NPAT-MI forecast is primarily due to a 15% higher aggregate urea NPAT, fueled by a 6.1% higher average urea ASP (following 11.7% higher average Middle East price forecasts), which outweighs 5.7% higher average gas prices.
- This outweighs our 21% lower aggregate NPK NPAT, driven by reduced NPM projections due to higher associated costs after DCM disclosed lower-than-expected 2024 NPK NPAT of ~VND80bn (50% below our prior estimate).
- We project 2025 reported NPAT-MI to rise 21% YoY, driven by (1) 15% YoY higher urea NPAT (YoY lower gas cost and rising ASP), (2) 2.4x YoY NPK NPAT (YoY higher utilization rate and lower gas cost), and (3) VAT savings.
- DCM’s valuation is undemanding at a 2025F P/E of 11.3x, implying a PEG of 0.7 based on a 2025-27F EPS CAGR of 17%. 2025F EV/EBITDA is 5.0x, 13% cheaper than the 5Y peer average of 5.8x.
- Upside potential: Higher-than-expected export prices and volume; profit from long-term projects.
- Downside risks: Higher-than-expected input gas cost; higher contributions from expensive gas sources from Petronas.
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