Đức Giang Chemicals steps into billion-dollar club after rising over 200%

September 21, 2021 - 09:57
After trading around VNĐ20,000 per share, Đức Giang Chemicals Group (DGC) shares started a rally trend from April 2020 despite the impact of the COVID-19 pandemic. 
Inside a production line of Đức Giang Chemicals. The company officially joins the billion-dollar club on the stock market. Photo ducgiangchem.vn

HÀ NỘI — After trading around VNĐ20,000 per share, Đức Giang Chemicals Group (DGC) shares started a rally trend from April 2020 despite the impact of the COVID-19 pandemic. 

On August 10, the company’s market price officially registered in the “3-digit” club with the closing price of VNĐ101,700 per share. The uptrend has continued until now. 

Data compiled in the last five sessions from September 10 to September 17 showed that DGC shares climbed for six consecutive sessions, and even hit the biggest daily gain of 7 per cent on September 13 and September 17. On last Friday’s session, which was on September 17, the company’s market price closed at VNĐ141,900 per share, up 219 per cent over the beginning of the year.

At that price and with more than 171 million shares outstanding, DGC's market capitalisation reached nearly VNĐ24.3 trillion, or US$1.05 billion, meaning it has become the newest member of the billion-dollar club on Việt Nam’s stock market.

On Monday, DGC shares continued to extend their rallies, up 5.29 per cent to VNĐ149,400 per share at 1:45pm, raising its market capitalisation to nearly VNĐ25.2 trillion, or US$1.1 billion. 

Although many businesses were under pressure due to the impact of the ongoing fourth wave of COVID-19 since the second quarter, Đức Giang Chemicals has benefited from lower Chinese production performance in the phosphorus segment, boosting the price of Đức Giang Chemicals’ products. 

China’s phosphorus production halved compared to last year. 

Statistics show that the price of yellow phosphorus and thermal phosphoric acid (TPA) skyrocketed 70 per cent and 36 per cent, respectively, since the beginning of the year, mostly in the past few months.

In its second-quarter financial results, the company posted strong growth in the first half of 2021. Its consolidated net revenue in the second quarter alone reached VNĐ2.04 trillion, up 29.3 per cent over the same period last year. Excluding expenses, the company’s profit after tax jumped 23.7 per cent to nearly VNĐ333.1 billion.

In the first six months of 2021, Đức Giang Chemicals’ net revenue reached nearly VNĐ4 trillion. Of which export sales alone were more than VNĐ2.8 trillion, accounting for over 70 per cent of total revenue, while the rest was sold domestically. The profit after tax during the period reached VNĐ625.1 billion, completing about 57 per cent of the profit target for the whole year.

In a recent report, Viet Capital Securities (VCSC) sees bright prospects for Đức Giang Chemicals’ deep-processing phosphorus products on China's production cuts. The company is expected to run these new production lines at maximum capacity after putting them into operation in late 2021 – early 2022.

VCSC raised its target EV/EBITDA (enterprise value/earning before interest, tax, depreciation and amortisation) forecast by about 20 per cent to 8.5x and increased its core EBITDA forecast for 2021 - 2023 (excluding contribution from the real estate segment) by 17 per cent.

Moreover, the average selling price (ASP) for the period 2021 - 2023 (based on phosphorus content) is also forecast to climb by 12 per cent.

Đức Giang Chemicals is the first producer to successfully produce Chloramine B, an important disinfectant used in COVID-19 prevention. This is not only a milestone for the company, but also for the country's chemical industry. 

Before that, the country was completely dependent on the import of Chloramine B from advanced countries, resulting in a shortage of local disinfectants and pushing the price of the product to the highest level due to the global COVID-19 pandemic. — VNS