Duc Giang Chemicals (DGC) 9M Profit Falls 46% Despite VND 527B Deposit Interest

Overview

Duc Giang Chemicals Group (HOSE: DGC) reported nine-month revenue of VND 7,016B, down 17.7% year-on-year, and after-tax profit of VND 1,369B, down 46%, according to the company’s results for the period to 30 September. The decline came despite roughly VND 527B in bank deposit interest, up 18%, as higher input costs and the suspension of the Khai Truong 25 mine hit the core yellow phosphorus business.

Key Facts

• 9M revenue: VND 7,016B, down 17.7% year-on-year.
• 9M pre-tax profit: VND 1,577B, down nearly 45%; after-tax profit VND 1,369B, down 46%.
• Bank deposit interest: about VND 527B over nine months, roughly VND 1.9B per day, up 18% year-on-year.
• Cash and bank deposits at 30 September: about VND 9,761B, down more than VND 3,600B from the start of the year.
• Deposit interest equals about 8.5x the company’s interest expense.
• Total assets: VND 16,514B at 30 September, down 15% from the start of the year; financial debt VND 1,390B, all short-term.
• Equity: VND 13,474B, with nearly half in undistributed after-tax profit.

What Happened

Duc Giang Chemicals Group JSC attributed the profit decline to sharply higher input costs for sulfur, electricity, coking coal and ammonia. In the first quarter, the Khai Truong 25 mine in Lào Cai province was suspended to serve an investigation, forcing the company to rely entirely on imported and purchased ore, which raised the cost of goods sold for yellow phosphorus relative to the prior-year period. The company disclosed the figures in its nine-month results.

The operational disruption follows the 17 March arrest of Chairman Đào Hữu Huyền and his son Đào Hữu Duy Anh, former Vice Chairman and General Director, by the Ministry of Public Security’s investigative police. The two were prosecuted and detained over alleged violations related to waste discharge and illegal mineral extraction, and Khai Truong 25 has been idle since then. The filing does not disclose a timeline for restarting the mine.

Market Context

DGC trades on HOSE and closed at VND 33,300 on 29 October 2026. The stock sits in the chemicals sector, where earnings are tied to yellow phosphorus and phosphoric acid pricing and to input costs for sulfur, coal and power. The nine-month result confirms a year of margin compression rather than a single-quarter miss. The company remains one of the most cash-rich names on the exchange, with VND 9,761B in cash and deposits, a buffer that has supported its balance sheet while core operations weaken.

Strategic Significance

The investment case for DGC now rests on two separate questions: whether the Khai Truong 25 mine restarts and restores low-cost ore supply, and whether yellow phosphorus prices recover enough to offset elevated input costs. Deposit interest of VND 527B is a meaningful earnings floor, but it is a financial return, not an operating one, and it cannot indefinitely substitute for margin recovery in the chemicals business. The legal proceedings against the chairman and former general director add governance and permitting risk that investors must price alongside the commodity cycle.

What to Watch

• Any announcement on the restart of the Khai Truong 25 mine in Lào Cai and the status of the investigation.
• Q4 and full-year 2026 results, particularly gross margin on yellow phosphorus.
• Yellow phosphorus and phosphoric acid export price trends and sulfur, coal and power input costs.
• Updates on the legal case involving Đào Hữu Huyền and Đào Hữu Duy Anh, and any governance changes.
• Movement in the VND 9,761B cash and deposit balance and the pace of capital expenditure.