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Dong Hai Ben Tre (DHC VN) – Q2 2025 Earnings – Earnings Growth On Margin Expansion
Summary of Q2 2025 results and outlook of Dong Hai Ben Tre JSC (DHC VN)
- Earnings growth driven by margin expansion: Core revenue rose 3.4% y/y, while net profit jumped 36.8% y/y to VND159bn, supported by higher margins. Kraft paper remained the main revenue contributor at 79.0% of sales (+0.9% y/y). Growth in H1 was driven by the packaging box segment (+14.3% y/y) to contribute the remaining 21.0% of revenue, underpinned by improved utilization (81.2% vs. 69.5% in H1/2024). Profit growth was fueled by (1) a higher contribution from the higher-margin packaging box segment, and (2) increased interest income from a larger cash position.
- Industry tailwinds support pricing power: Vietnam’s packaging paper oversupply has eased following stricter environmental enforcement that removed ~1 million tonnes of annual capacity (~15% of 2024 output). With no new capacity expected through YE2026, larger compliant producers like DHC are positioned to gain pricing power, supporting higher average selling prices (ASPs). The oversupply mainly affects medium and testliner products, while Vietnam continues to import higher-grade kraftliner—the segment DHC will enter with its upcoming Giao Long 3 (GL3) mill.
- Long-term growth drivers remain intact: The industry is forecast to grow at a 15% CAGR through 2027, supported by: (1) sustained double-digit retail sales growth from rising incomes; (2) a fast-growing e-commerce market with a projected 10% CAGR over the next five years; (3) robust export activity, especially from the Mekong Delta where DHC operates; and (4) a regulatory push towards sustainable packaging. Additional upside could come from export opportunities to China as its kraft paper sector recovers.
- H2/2025 forecast: Net revenue profit will be supported by higher packaging box utilization, a decline in OCC costs, and robust financial income.
- 2026 outlook: Net profit is expected to remain stable as higher earnings from increased packaging box contribution offset the impact of (1) a higher effective tax rate (tax incentives for GL2 expire in 2025) and (2) lower financial income due to cash deployment for GL3 investment.
- GL3 project accelerated: The GL3 project timeline has been brought forward by one year from the April plan, leveraging favorable machinery supply conditions to fast-track construction within budget. We forecast the commercial operations in Q3/2027.
Click here to read our comments on DHC’s previous quarterly performances.
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