Earnings Report /
Vietnam

PetroVietnam Fertilizer & Chemicals: Bottom line growth on the back of increasing Urea price

  • Solid 2021 results with strong increase in chemical products and fertilisers

  • Fertiliser prices forecast to remain high, which will be the main driver in 2022

  • Gross profit margin of Urea can reach 52% in 2022; recommend Buy with a target price of VND73,100 per share

Vu Tran
Vu Tran

Oil & Gas, Fertilizers

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Rong Viet
15 March 2022
Published byRong Viet

DPM's revenue and profit grew 64.7% and 350.8% respectively in 2021 thanks to the strong increase in fertilisers price and chemicals as well as extraordinary profits.

The company is excepted to announce strong Q1 22 business results thanks to positive fertiliser prices in the context of the Russia-Ukraine conflict, which may lead to a global shortage of urea.

We believe that the DPM's will post growth instead of decline – as previously forecast – in its 2022 business results. We raise our 2022 earnings forecast from VND1,676bn (US$73.5mn) to VND5,004bn (US$219.4mn) due to the change in fertiliser price forecast.

We recommend Buy on DPM with a target price of WND73,100/share. However, investors must be especially careful with fertiliser price movements related to geopolitical fluctuations surrounding the Russia-Ukraine war. We see downside risk from restricting fertiliser export.