Will DBC stock continue its upward trend?

This has increased anticipation that DBC's stock will continue to "surf the waves." However, after the first half of this year, DBC has only met 25% of its sales target and 30% of its profit target, making it difficult for the firm to accomplish its yearly objectives.

Short-Term Movements

According to the company’s Q2/2024 financial report, consolidated revenue and profit dropped by 8% and 55% year-over-year. Despite this, DBC's cumulative revenue for the first half of 2024 reached VND 6.437 trillion, an 11% increase compared to the same period last year. Meanwhile, net profit after tax skyrocketed 36 times to VND 218 billion. This surge pushed DBC's stock to a thrilling high in the first half of July, reaching over VND 34,000 per share from a low of VND 22,000 in April 2024.

The recent short-term surge in DBC's stock can be attributed to market expectations regarding the company's real estate (RE) business. This segment contributed significantly to the company's earnings, providing a solid foundation for its financial results in the current period, according to DBC's leadership.

Additionally, short-term "pork waves" due to the impact of Typhoon No. 3 in northern Vietnam in early September have driven DBC’s stock up again. This spike, tied to the essential and potentially scarce demand for pork, is expected to be a short-term trend.

Long-Term Outlook

In the near future, DBC has only a little over three months to achieve its consolidated revenue target of VND 25.38 trillion, a 14% increase from 2023, and a consolidated after-tax profit goal of VND 730 billion, 29 times higher than in 2023. Given its first-half results, DBC is facing difficulty in meeting these targets unless it can generate unexpected revenue from new business or other sources.

However, DBC is expected to benefit from a pork supply shortage. This shortage stems from broader market dynamics and the effects of Typhoon No. 3, while consumer demand is gradually recovering.

Looking at the 2024 livestock business outlook, DSC Securities JSC says that live pig prices have been rising since the beginning of the year due to restricted availability and the resurgence of African swine flu. Supply will most likely take some time to recover while restocking activities are ongoing. As a result, pig prices are projected to continue high for the remainder of the year, giving livestock enterprises like DBC a chance to increase profitability. Furthermore, grain costs, which are important elements in animal feed, have dropped dramatically due to favorable production circumstances. The supply-demand balance is predicted to shift toward excess during the 2024-2025 crop year, keeping grain prices low in the second half of the year.

DSC also points out that DBC currently does not have any real estate projects that can generate sudden profit spikes like in previous periods. Therefore, DBC’s growth in 2024 will depend entirely on its core activities in animal feed and livestock farming.

With DBC’s 2024 net profit projected at VND 627 billion, which is lower than its target, the estimated earnings per share (EPS) for 2024 is VND 1,943, giving a forward P/E ratio of 14.6x. DSC sets the target price for DBC stock in 2024 at VND 37,900 per share.