Seizing opportunities from fertilizer stocks

However, not all fertilizer stocks are poised for strong growth. Investors must carefully screen their choices before committing funds.

Industry Outlook Through the Lens of VAT

Vietnam's strong agricultural base has driven the size of its fertilizer market to $3.44 billion in 2024, with projections reaching $4.2 billion by 2030. This creates ample opportunities for growth in the fertilizer sector, supported by government initiatives for sustainable agriculture, expanded export-oriented farming, and environmentally friendly practices. In 2025, the industry is expected to benefit from rising domestic and international demand, driving corporate profitability.

Beyond market demand, the fertilizer industry also stands to gain from VAT policy changes. The shift from VAT exemption to a 5% VAT rate will raise final prices for consumers. However, according to industry insiders, in a scenario of intense competition between domestic and imported fertilizers, local producers may reduce their base prices before adding VAT to support farmers.

Currently, imported fertilizers are priced lower than domestic ones. If competition escalates, local producers—who will receive VAT refunds on production costs starting July 1—could reduce pre-VAT prices, thereby narrowing the price gap with imports and encouraging farmers to use domestically produced fertilizers.

Moreover, fertilizer manufacturers can claim VAT refunds on input costs. This policy mainly benefits producers of Urea and DAP fertilizers, which are made from raw materials such as natural gas, coal, and phosphate rock. For NPK fertilizer producers, the VAT policy has a limited impact since their inputs (such as Urea, single phosphate, and potassium) are already fertilizer products. Thus, whether VAT-exempt or not, their cost structures remain largely unaffected.

Which Stocks to Watch?

Given this context, investors might consider the following stocks:

DCM – Ca Mau Fertilizer JSC

For 2025, DCM plans to reach VND 13,983 billion in revenue and VND 774 billion in post-tax profit. Compared to 2024, revenue is set to grow by 3.9%, but profit is projected to drop 42%, signaling a cautious forecast. That said, actual profit may surpass the target, especially due to VAT input refunds effective from July 1, 2025. While Urea and NPK output is expected to decline due to lower market demand, selling prices are projected to rise. The VAT refund alone could reach VND 84 billion in 2025. Investors may consider DCM at a target range of VND 26,000–28,000/share.

DPM – PetroVietnam Fertilizer and Chemicals Corp.

In 2024, DPM recorded VND 13,496 billion in revenue and VND 594 billion in net profit, an 11% year-on-year increase. For 2025, the company targets VND 12,876 billion in revenue and VND 320 billion in post-tax profit. This outlook factors in rising global Urea prices and the new 5% VAT from July 1. VAT input refunds are estimated at VND 170 billion in 2025 and VND 350 billion in 2026. However, the actual benefits depend on how much DPM supports farmers through pricing. Investors may consider DPM at around VND 28,000/share.

DGC – Duc Giang Chemicals Group

DGC is projected to grow revenue by 18% in 2025, assuming a 4% increase in yellow phosphorus prices and the ability to expand sales across all product lines. Net profit is expected to grow 32%, driven by greater control over raw materials—its apatite ore sourcing will rise from 80% to 100%. Investors may consider DGC at a range of VND 78,000–80,000/share.

DDV – DAP – Vinachem JSC

For 2025, DDV is forecasted to achieve VND 3,414 billion in revenue and VND 214 billion in net profit, marking a 3% and 49% increase year-on-year, respectively. DDV expects to maintain growth momentum, supported by rising fertilizer demand and China’s fertilizer export restrictions. Investors may consider DDV at around VND 14,000–16,000/share.