We attended DGC’s annual general meeting (AGM) on August 13. Below are our key takeaways:
DGC’s operations remain largely normal despite the company’s recent legal and governance issues, with its engineering and operating teams continuing to work as usual and key projects progressing. Management has secured sufficient apatite supply through Q1 2027 and reaffirmed a Q4 2026 trial run for the Nghi Son chemical complex, while continuing to streamline non-core businesses. However, near-term earnings remain under pressure from elevated input costs, with 2026 NPAT-MI guidance at only 79% of our forecast. We therefore see downside risk to our 2026F earnings forecast, pending a fuller review.
1. 2026 guidance
- Revenue: VND10.1tn (-10% YoY; 96% of our 2026F forecast).
- NPAT-MI: VND1.6tn (-49% YoY; 79% of our 2026F forecast).
- While revenue guidance is broadly in line with our forecast, NPAT-MI guidance is well below our forecast, which we attribute to higher-than-expected costs. We foresee downside risk to our forecast, pending a fuller review.
2. Project and growth updates:
- Phosphorus business: DGC has secured sufficient apatite supply through end-Q1 2027. Management said purchase contracts have already been signed and shipments are awaiting delivery. Longer term, DGC plans to diversify imported apatite beyond Egypt to potential suppliers in Morocco and Kazakhstan as domestic ore becomes increasingly scarce and lower in quality.
- Chlor-alkali: Management reaffirmed a Q4 2026 trial run for the Nghi Son chemical complex. Per management, all basic construction work has been completed, while equipment installation has reached around 90%. Management attributed the delay to difficulties in importing specialized equipment, particularly lengthy export-approval procedures, which have now been solved.
- Battery: Management said demand for traditional lead-acid batteries at Tia Sang Battery is declining, while lithium batteries, energy-storage systems, and solar-related storage products are growing strongly. DGC therefore intends to continue researching these areas, but highlighted Chinese manufacturers’ advantages in scale, technology, and supply chains, alongside increasing Chinese battery investment in northern Vietnam.
- Real estate: DGC continues to pursue its project in this segment, although administrative restructuring among the relevant authorities has delayed procedures. Management said the company has sufficient financial capacity to accelerate construction, but current mortgage rates of around 14% are unattractive and could constrain homebuyer affordability. As a result, DGC plans to balance the pace of development with market demand and adjust the project timeline accordingly.
- Ethanol: DGC has found a buyer for its ethanol plant and targets completing the divestment in 2026. Management said the two parties are currently negotiating the transfer agreement and that DGC will disclose the transaction in the nearest quarterly financial statements after signing. Management explained that ethanol is not one of DGC’s core competencies and that imported US ethanol has now become materially cheaper than domestic production, reducing the attractiveness of operating the asset despite the Government’s biofuel push. While the plant can still operate profitably, expected returns are not sufficiently attractive for DGC to continue allocating capital and management resources to the business.
- Other investment priorities include expanding high-purity phosphorus and electronic/semiconductor-grade phosphoric acid capacity, upgrading the Hung Yen detergent plant, expanding the Dinh Vu solvent warehouse, and increasing phosphogypsum recycling capacity.
3. Profit distribution
- 2025 dividend: 80% in cash dividends, equivalent to VND8,000/share (18% yield). DGC has already paid VND3,000/share and plans to distribute the remaining VND5,000/share.
- 2026 dividend: 30% in cash and/or in stock (6.8% yield).
4. Board and governance changes
- The AGM approved the dismissal of Board members Luu Bach Dat and Nguyen Quoc Trung following their prosecution by the authorities. DGC subsequently elected Do Van Dong and Dao Duc Manh as Board members for the remainder of the 2024–2029 term. Prior to the election, Do Van Dong served as Deputy Head of DGC’s Project Department, while Dao Duc Manh was a specialist and Head of DGC’s Import-Export Department.
- DGC plans to simplify its senior governance and legal-representative structure, including reduce the number of legal representatives from three to one, with the CEO serving as the sole legal representative, and removing the Vice Chairman position.
Powered by Froala Editor
