DAP - Vinachem (UPCoM: DDV) | 2Q26 Update, BUY – Upside +31.1%

Strong Revenue but Margin Temporarily Compressed

DDV 2Q26 Performance

DDV reported 2Q26 results, with revenue rising to VND 1,784bn (+11.5% YoY, -3.2% QoQ), while NPAT declined 31.7% YoY to VND 105bn. For 1H26, revenue reached VND 3,626bn (+31.5% YoY) and NPAT VND 229bn (-16.6% YoY), meeting 52.5%/61.6% of our full-year forecasts.

Bottom-line performance lagged top-line growth as higher raw-material costs compressed margins. COGS increased 17.9% YoY to VND 1,607bn, outpacing revenue growth and causing GPM to decline to 9.9% from 14.8% in 2Q25. Meanwhile, financial income declined 28.0% YoY to VND 18bn, partly offset by lower SG&A expenses of VND 59bn (-14.8% YoY).

Operating metrics remained mixed. Realized DAP ASP reached VND 19.6mn/ton (+20.9% YoY), while NH3 ASP increased to VND 20.4mn/ton (+80.0% YoY). Export revenue rose to VND 871bn (+12.7% YoY), while domestic revenue reached VND 913bn (+10.3% YoY). Despite stronger selling prices, elevated sulfur and ammonia costs continued to weaken DAP spreads. Raw-material costs remained the key earnings headwind in 1H26. Average market sulfur prices increased to USD 764/ton (+196.1% YoY, +44.2% YTD), while ammonia prices reached USD 450/ton as of late June (+149.6% YoY, +39.2% YTD).

DDV increased inventory by 30.5% YTD to VND 906bn to secure raw materials and partially cushion the impact of further price increases. This resulted in negative operating cash flow of VND 177bn and an increase in short-term borrowings to VND 403bn at end-2Q26. Nevertheless, liquidity remained healthy, with approximately VND 1,600bn in cash, cash equivalents and short-term deposits.

Earnings Forecast

We revise our FY26E forecasts for revenue and NPAT to VND 6,909bn (+22.2% YoY) and VND 372bn (-41.0% YoY), respectively. The revision reflects higher DAP ASP assumptions, offset by significantly higher sulfur and ammonia costs and weaker-than-previously-expected gross margins.

For FY27E/FY28E, we forecast revenue of VND 8,031bn (+16.2% YoY) and VND 8,471bn (+5.5% YoY), while NPAT is projected at VND 472bn (+26.8% YoY) and VND 664bn (+40.7% YoY), respectively. The earnings recovery is based on our expectation that raw-material costs will gradually normalize, supporting an improvement in DAP spreads and GPM.

Target Price and Rating

We revised our TP from VND 36,990/share to VND 24,000/share, primarily reflecting our 29.5%/30.5% cuts to FY26E/FY27E NPAT forecasts following higher sulfur and ammonia cost assumptions. DDV closed at VND 18,300/share on 30 July 2026, representing a potential upside of 31.1% compared to our TP, we therefore maintain a BUY rating for DDV. Together with an annual cash dividend of VND1,700/share, equivalent to an 8.8% dividend yield, this represents an attractive opportunity.