Company Quarterly Earnings Update – DHC VN – 2021 H1

Summary of the 2021 H1 results of Dong Hai Ben Tre JSC (DHC VN)

H1/2021 results highlights

  • Revenue went up by 58.9% y/y to VND2,097bn driven by both volume growth (paper volume +17.8% and cardboard boxes +40.5% y/y) and price increases as the company passed on surged raw material costs. All DHC’s packaging paper and cardboard box facilities were run at full capacity with the company able to sell all it produced thanks to solid demand due to (i) the recovery of domestic demand from H1/2020’s low base, (ii) the robust increase of Vietnam’s total export value (+28.4% y/y in H1/2021).
  • The gross margin in H1/2021 was 19.6%, almost equal to the same period last year. On a quarterly basis, Q2’s gross margin was 16.2%, much lower than 23.1% in Q1 as prolonged high Old-Corrugated Cardboard (OCC) prices started to reflect in the company’s input costs. Net financial expenses reduced by VND13bn as the company has paid off its long-term loans. Overall, net profit was VND301bn (+79% y/y).
  • DHC’s financial position remained healthy as the company reduced its long-term loans to zero. Leverage was minimal with D/E and D/A ratios of 0.24x and 0.16x, respectively.


  • Domestic demand for packaging paper weakened in Q3 as strict lockdown measures were implemented for almost the entire quarter. Thanks to DHC’s competitive product quality, prices, and strong export demand, the company was able to export more to compensate for weak domestic demand. Turning to Q4, domestic demand is projected to rebound on the back of seasonality in export activities and potentially softer social distancing measures. OCC prices will remain high over the next two quarters due to demand recovery, continued disrupted collection activities, and high shipping costs.
  • We revise our 2021 revenue estimates up by 3.1% due to higher selling prices as OCC prices are higher than expected. The gross margin will narrow in Q3 (due to high input costs coupled with weak domestic demand) and improve in Q4 (as the company can pass on surged input costs to customers when demand is back as COVID-19 restrictions are lifted). For the whole year, the gross margin will be 17.6%, higher than the previous forecast of 16.9%. The bottom line is revised up by 4.4% to VND525bn, +34% y/y.
  • Our estimates for 2022 are unchanged vs. the last forecast. Revenue is expected to decline by 9.3% y/y mainly due to lower selling prices as OCC prices normalizing, while the cardboard box volume will increase thanks to the new cardboard box factory coming into operation. Net profit is set to be flat at VND526bn due to no inventory benefit as seen in 2021, and higher tax rates.

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