DAP - Vinachem (UPCOM: DDV) | Initiation Report, BUY – FW2026 Upside +31.8%

Company Information

DAP – Vinachem Limited Company was established in 2008 as a member of Vietnam National Chemical Group (Vinachem) and is one of Vietnam’s key domestic producers in the phosphate fertilizer segment. The company was equitized in 2014 and officially traded on the UPCoM exchange from June 10, 2015, under the ticker DDV.

DDV currently operates an integrated chemical and DAP fertilizer complex with complete production chain, including one DAP fertilizer plant with capacity of 330,000 tons/year, one sulfuric acid plant with capacity of 414,000 tons/year, and one phosphoric acid plant with capacity of 161,700 tons/year, supported by auxiliary utilities including a thermal power plant and wastewater treatment facilities.

With current production capacity, DDV has established itself as the leading DAP fertilizer manufacturer in Vietnam market, accounting for more than 30% of Vietnam domestic DAP fertilizer capacity.

Financial Performance

In 2025, net revenue increased 67.1% YoY while cost of goods sold (COGS) increased 56.4% YoY, allowing gross profit to more than double at VND 940 bn (+158.6% YoY) and GPM improved to 16.6%. At the same time, financial income rose to VND 87.6bn (+76.6% YoY), mainly thanks to higher deposit interest income and foreign exchange gains. Selling expenses and administrative expenses increased at a more moderate pace of 8.7% and 23.7%, respectively. As a result, net operating profit climbed to VND 789bn, up 261.0% YoY, highlighting DDV’s high operating leverage when fertilizer spreads turn favorable.

DDV’s total assets stood at VND 3,033 bn (+35.6% YoY). The balance sheet remained healthy, with cash and cash equivalents at VND 47.9bn and short-term financial investments, mostly term deposits, at VND 1,505bn. Meanwhile, inventories increased sharply to VND 693.9bn from VND 415.2bn, reflecting higher working capital needs amid stronger sales activity and commodity-price movements. On the liabilities side, total liabilities rose to VND 772 bn (+67.8% YoY), including new short-term borrowings of VND 123bn, while owner’s equity increased to VND 2,262 bn (+27.3% YoY). Overall, DDV ended 2025 with a strong net cash position and significantly improved profitability, although swings in fertilizer price volatility remain key factors to monitor going forward.

Investment Rationales

We like DDV for its strategic position in DAP fertilizer segment in Vietnam, our investment thesis for DDV includes:

1. Strategic role in Vietnam’s DAP fertilizer supply chain

DDV is part of Vinachem and operates one of Vietnam’s key domestic DAP production complexes. As global supply chains become more volatile and imported fertilizer face periodic disruption, local production is becoming increasingly important. In this context, DDV plays a crucial role in DAP fertilizer supply for Vietnam’s agricultural sector, especially in spring-autumn period for certain crops such as rice, coffee, cashew and fruits

2. Fully integrated production chain allows DDV to benefit from a favorable DAP price cycle

As one of Vietnam’s main domestic DAP producers, the company has a fully integrated production chain, from sulfuric acid and phosphoric acid to finished DAP fertilizer. This allows DDV to directly capture improvements in phosphate fertilizer margins. After a strong rebound in 2025, the global phosphate market is still relatively tight, mainly due to limited exports from China and steady seasonal demand. As such, DDV is well-positioned to maintain strong selling prices and continue improving its profit margins.

3. Structural benefit from the fertilizer VAT reform

Starting 1 July 2025, fertilizers will be subject to a 5% VAT, replacing the previous non-taxable regime. For domestic producers like DDV, this is a clear positive. The key benefit lies in being able to reclaim input VAT, which helps DDV lower production costs and improve margin and profitability. Unlike price-driven cycles, this policy shift provides a more sustainable boost to profitability over the medium term.

4. Geopolitical supply shocks, albeit with input-cost risks

The current U.S.–Iran conflict has tightened global fertilizer supply and disrupted trade flows through the Strait of Hormuz, an important corridor for fertilizer and feedstock shipments. For DDV, the first-order effect is supportive for fertilizer pricing, particularly if disruptions lift regional DAP prices. That said, the company is not a pure beneficiary, as it also relies on imported sulfur and partly imported ammonia, which prices have increased sharply since the conflict starts. In our view, 2026 profitability will be impacted as ASP growth will trail behind production cost increases. But once the conflict is over and raw materials prices normalize, we believe earnings growth will be robust from 2027 forward.

5. Strong balance sheet with ample cash provides resilience through the cycle

As of end-2025, DDV held VND 1,505bn in short-term investments against just VND 118.6bn in short-term borrowings. Total equity stood at VND 2,265.2bn, materially above total liabilities of VND 773.8bn. This net cash position gives DDV greater resilience against commodity volatility, lowers financial risk, and supports cash dividend-paying capacity relative to more leveraged peers

6. Attractive valuation with improved earnings base

DDV’s current valuation remains relatively low compared to its recovery of earnings and balance-sheet strength. As of 17 Apr 2026, DDV was trading at around VND 28,000/share, implying a market capitalization of roughly VND 4.0tn, trailing P/E of 6.6x, and P/B of 1.8x, which is significantly lower than industry average P/E multiples of 14.2x and P/Book multiples of 2.0x.  We believe this valuation does not fully reflect (1) the company’s structurally improved profitability following the fertilizer VAT reform, (2) its strong net cash position, and (3) continued near-term support from elevated DAP prices.