The stock price of DGC, a chemical company, has had a dramatic surge in the market session. As observed in the morning session on March 13th, DGC rose to its limit up with a significant increase in trading volume to 3.2 million shares, closing at 127,200 Vietnamese dong. This is also the highest level in the company’s listed history.
In fact, DGC has been steadily climbing for over a month with an almost 44% increase in value, and its market capitalization has increased by 15,000 billion Vietnamese dong (~1.9 billion USD). Compared to the same period last year, this stock has nearly tripled.
The semiconductor boom is believed to be the main driving force behind the steep rise of this major chemical company’s stock in recent times.
Nikkei, citing data from the World Semiconductor Trade Statistics (WSTS) of major semiconductor manufacturers, shows that the global semiconductor market in 2024 will increase by 13% compared to last year, reaching $588.3 billion and surpassing the previous record set in 2022. Projections from the World Semiconductor Trade Statistics and Gartner also forecast a global semiconductor growth of 11.8% and 18.5% respectively in 2024 compared to the same period in 2023.
Speaking of the semiconductor industry, one cannot ignore DGC, which accounts for nearly one-third of the global export of yellow phosphorus (a raw material for chip production). The leaders of Duc Giang Chemical Company stated that by the end of 2024, Vietnam’s phosphorus demand will surge as new chip and battery factories in East Asia and North America diversify their supply sources outside of China.
Vietcap Securities (VCSC) predicts that global demand for yellow phosphorus will grow at a double-digit rate in the medium term, led by EV battery demand and artificial intelligence chip demand. In this regard, DGC will benefit and continue to gain market share in the industrial yellow phosphorus chemical market in the medium term as China no longer exports yellow phosphorus.
In the semiconductor field, DGC has established a dominant presence in East Asia (excluding China) in the global market for yellow phosphorus and is rapidly penetrating the US market. The company’s leading yellow phosphorus purity exceeds that of all its competitors in the global export market. According to Vietcap, DGC is expected to benefit from the increase in chip production by the US and its allies, regardless of the location of the factories.
SSI Securities estimates that DGC’s profit in 2024 will increase by 26% compared to the same period, thanks to strong global semiconductor revenue growth and the accompanying fertilizer demand for agriculture. According to the analysis unit, the gradual transition from yellow phosphorus to higher value-added products like phosphoric acid will increase Duc Giang Chemical Company’s profit margin.
At the same time, the construction of the Chloralkali plant (from Q2 2024) will promote long-term profit growth for the company (expected from 2026). However, with the current DGC stock price on the exchange, SSI believes that it already reflects the potential for growth in the next year.
Despite its significant potential, the leaders of DGC remain cautious in their business plans for 2024. According to the documents of the Annual General Meeting of Shareholders in 2024, DGC aims for consolidated revenue of 10,202 billion Vietnamese dong, an increase of 4.6%, but the expected after-tax profit is only at 3,100 billion Vietnamese dong, a decrease of 4.4% compared to 2023. The dividend for 2024 is expected to be maintained at 30%.
