Company Quarterly Earnings Update – DPM VN – 2020 9M

Summary of the 2020 9M results of Phu My Fertilizer (DPM VN)

9M/2020 results highlights:
  • Net revenue increased by 8.0% to VND5,831bn in 9M/2020, mainly thanks to higher urea sales, which grew by 18.9% y/y as the urea plant operated at full utilization. The in-house NPK sales expanded by 17.6% y/y due to increasing utilization at this factory. On the other hand, sales from other products, mostly from trading imported fertilizer, dropped by 18.0% y/y.
  • Gross margin expanded to 23.0% in 9M/2020 from 15.7% in the same period last year thanks to (i) higher sales contribution from urea business due to recovery in selling volume; (ii) low input gas price. Net financial income also increased significantly, thanks to a higher cash position. All in all, net profit jumped to VND590bn, more than three times higher than last year.
  • By the end of September 2020, DPM’s cash and cash equivalent were VND4,102bn, accounting for 36% of its total assets. The debt amount was only VND1,099bn, helping the company’s financial leverage stay low, with D/E of 0.13x and D/A of 0.10x.
Outlook
  • The 9M/2020’s results were on track with our expectations in our previous report. The main difference is that while the NPK volume was under our estimate, its gross margin was slightly higher than our estimate. Thus, the net impact is minimal.
  • We expect DPM’s net profit to increase by 91.7% y/y to VND724bn in 2020, mainly thanks to urea business’s recovery. 2021’s net profit should decline by 8.0% y/y to VND666bn due to higher oil prices.
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