Company Quarterly Earnings Update – DPM VN – 2020 Q1

Summary of the 2020 Q1 results of Phu My Fertilizer (DPM VN)

Q1/2020 results highlights:
  • Net revenue increased by 7.8% y/y to VND1,697bn mainly thanks to the urea business. DPM’s urea volume reached 186K tons, up by 38.9% y/y while its sales were up by 20.4% y/y as DPM’s urea factory operated normally compared to an interruption in the same time last year. On the other hand, sales of NPK was down 12.9% y/y and sales of trading fertilizers were down 13.6% y/y.
  • Net profit reached VND105bn, up by 102.5% y/y mainly thanks to the higher gross margin caused by the bigger decline of input gas price vs. the decline of urea price in Q1/2020.
  • The impacts of the salinity-hit, the drought situation, and the COVID-19 on DPM’s business were insignificant in Q1/2020. The situation will likely be similar for the rest of the year.
  • In the context of low oil price, DPM’s input price should fall much more than the urea price, helping to expand DPM’s gross margin in 2020 and 2021.
  • Based on the input gas price mechanism, DPM’s input gas should be still very competitive compared to regional peers as long as WTI oil price stays below $60/barrel.
  • We expect DPM’s net profit to jump by 135.6% y/y to VND890bn in 2020, then will decline by 8.6% to VND813bn in 2021 as oil price will likely recover by then. However, this will still be a high profitability level compare to its historical performance.

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