DGC — Initiation of Coverage

P4 is DGC’s major long-term growth driver, representing c.45% of projected revenues in 2024-30E (+14.1% CAGR). P4 is a key input for thermal process acid, which is vital for IC manufacturing. DGC is particularly well positioned as a P4 supplier for IC makers in Asia ex-China. As such, we view the stock in large part as an ancillary play on the global semiconductor industry.

Chlor-Alkali-Vinyl project should reduce product concentration risk, with construction to start in Feb and commercial operations by 2Q26. We expect the CAV project to achieve 70% capacity utilization in 2026E and 100% CU by 2028E.

Forecast +16.5% revenue CAGR in 2023-27E, with P4 as the key driver. We expect +23% YoY sales growth in 2025E after the soft +4% YoY uptick of 2024E.

We forecast PATMI to rebound by +27% YoY in 2025E following the flat (+2% YoY) growth of 2024E. We expect ROE of 24.3% in 2024 and 27.2% in 2025, much higher than the regional peer median of 12.1% and 13.3%, respectively, reflecting DGC’s advantages of low COGS and value chain positioning.

Upside optionality from 1) lithium batteries, 2) the potential residential property project, and 3) (in the very long-term) bauxite/aluminum business. Batteries represent just c.1-2% of 2024-30E sales in our model, while we have not factored in any value from the latter two projects, suggesting upside risks.

Yuanta vs. the Street: We are cautious on near-term ASPs and COGS, with the latter to be driven by elevated electricity and sulfur prices in 2025-26E. Still, our fair value estimate is 3% higher than the Street median, which may reflect a more cohesive in-house long-term view on the semiconductor industry.

We initiate coverage with BUY and DCF-based target price of VND 134,074, implying 12-month TSR of 22%. Our target price implies reasonable P/E multiples of 13.5x for 2025E (and 0.5x PEG) and 10.6x for 2026E (0.4x PEG).

Please access the link for our complete report:DGC – Initiation

Analysts:

An Nguyen, An.nguyen@yuanta.com.vn

Binh Truong, Binh.truong@yuanta.com.vn