- We lower our target price by 22%, reflecting a 17% cut to 2026F core EBITDA and reducing our target EV/EBITDA multiple to 6.5x (from 8.0x previously). That said, we reiterate our BUY rating as the company’s share price has declined 19% over the past three months.
- We cut our 2026F/27F/28F NPAT-MI forecasts by 14%/13%/12%, mainly due to a lower ore self-sufficiency assumption following weaker-than-expected Q4 2025 mine cost savings and slower-than-expected expansion of mine No.25. We reduce our ore self-supply assumptions to 50% p.a. (from 80% p.a.). Our revised forecasts imply 2026F/27F/28F NPAT-MI YoY growth of 5%/15%/22%, with core NPAT-MI (excluding real estate) YoY growth of 5%/2%/6%.
- We project GPM to decline to 26.7%/27.5%/27.5% in 2026F/27F/28F (from 31.9%/31.4%/30.6%), mainly driven by our lower ore self-supply assumption. While the YoY contraction in 2026 is pressured by a higher P4 export tax and a rising mix from lower-margin segments, as incorporated in our prior Update Report, ore input costs have emerged to be a more relevant driver of earnings variability in the near term.
- DGC is trading at 5.2x/4.3x/3.5x 2026F/27F/28F EV/EBITDAs, implying 37%/49%/58% discounts to its 10Y average. We believe input-driven margin pressure in the core P-business has largely priced in, with earnings set to stabilize on new project contributions. At current level, the risk–reward appears skewed to the upside.
- Downside risks: Stronger-than-expected compression in market price spreads, delays in the chlor-alkali project, and unfavorable changes in phosphorus export policies.
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