Company Quarterly Earnings Update – DHC VN – Q2 2022

Summary of the Q2/2022 results of Dong Hai Ben Tre JSC (DHC VN)

H1/2022 results highlights

  • Net revenue slightly decreased 3.4% y/y to VND2,025bn, resulting from the mixed results of kraft paper revenue (-4.9% y/y) and cardboard boxes revenue (+16.0% y/y). 88% of revenue came from kraft paper sales. Of which, the domestic market remained solid (132,016 tons, +0.9% y/y), though, export volumes dropped 47.6% y/y to 14,193 tons due to weaker demand in China. Meanwhile, cardboard box sales volume remained the same as last year’s levels. However, it did not grow as expected as some of DHC’s customers, aquafarmers reduced farming due to rising feedstock prices, therefore there was less demand for cardboard boxes.
  • The gross margin was 18.0%, slightly lower than that of H1/2021 due to the high base of Q1/2021, but this has since normalized as OCC (Old Corrugated Cardboard) prices eased after last year’s peak. Overall, net profit reached VND231bn, -23.1% y/y.

Other developments

  • The AGM approved adjusting the investment plan from the third cardboard box facility to the next paper mill, Giao Long 3. DHC acquired 4.5 ha of land for this project and plans to acquire another 1.5 ha for storage and wastewater treatment. The total capex is expected to be VND1,800bn-VND2,000bn, mostly financed by retained earnings. The expected production capacity is 410,000 tons/year. The main products, higher quality white-top and kraft-liner, are more profitable than DHC’s current products and are in high demand in the domestic market. We estimate commercial production to start in H2/2025.


  • For 2022, we revise our estimates for the revenue down 14.3% to VND3,971bn (-4.6% y/y) reflecting the impact of (1) lower selling prices which DHC started to cut this month following the recent sharp drop in OCC prices; (2) China’s lockdown and low aquacultural export level, which affects the sales of both kraft paper and cardboard boxes. The gross margin will narrow in Q3 due to the high-priced raw material inventory, while selling prices have also been adjusted. Nevertheless, it will recover in Q4. The gross margin for the whole year will be 18.6%, with net profit revised down 5.2% to VND495bn (+2.9% y/y)
  • For 2023, we estimate revenue will increase 5.9% to VND4,205bn. The gross margin is expected to improve to 18.7% thanks to further normalizing of OCC prices and a higher contribution of cardboard box revenue from the new cardboard box facilities. Overall, net profit is expected to reach VND541bn, +9.2% y/y.

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