DGC: Three Senior Executives Prosecuted, Q2 Net Profit Falls 51%

Overview

Duc Giang Chemicals Group (DGC) announced on July 23, 2026 that three senior executives have been prosecuted for environmental pollution and illegal resource exploitation, following the March arrests of its chairman and vice chairman. The company also reported a 51% drop in Q2 net profit to VND 440 billion, with revenue down 16.5%.

Key Facts

• Three DGC executives were prosecuted on July 23, 2026: CEO Luu Bach Dat (environmental pollution), board member Nguyen Quoc Trung (resource exploitation violations), and deputy general director Phung Trong Tu (environmental pollution).
• All three were placed under travel bans (cấm đi khỏi nơi cư trú).
• On March 17, 2026, Chairman Dao Huu Huyen and Vice Chairman Dao Huu Duy Anh were arrested and detained on charges including accounting violations, resource exploitation, and environmental pollution.
• DGC’s Q2 2026 net profit fell 51% year-on-year to VND 440 billion; net profit attributable to parent company dropped 54% to VND 389 billion.
• Q2 revenue was VND 2,415 billion, down 16.5% year-on-year.
• Gross margin narrowed from 33.9% in Q2 2025 to 18.9% in Q2 2026.
• First-half 2026 net profit was VND 871 billion, down 49% year-on-year.

What Happened

On July 23, 2026, Duc Giang Chemicals Group (DGC) disclosed that it had received notices from the Ministry of Public Security’s investigative police regarding the prosecution of three senior leaders. CEO Luu Bach Dat and Deputy General Director Phung Trong Tu were charged with causing environmental pollution, while board member Nguyen Quoc Trung was charged with violating regulations on resource exploration and extraction. All three were subjected to travel bans, not detention.

This action follows the March 17, 2026 arrests of Chairman Dao Huu Huyen and Vice Chairman Dao Huu Duy Anh. Huyen was charged with three counts: accounting violations causing serious consequences, illegal resource exploitation, and environmental pollution. Duy Anh was charged with accounting violations. The company also released its Q2 2026 financial statements showing a sharp decline in profitability.

Market Context

DGC shares closed at VND 40,000 on July 23, 2026, unchanged from the prior session with thin volume of 304,000 shares on HOSE. The stock has been under pressure since the initial arrests in March, and the latest legal developments, combined with deteriorating fundamentals, reinforce negative sentiment. The chemicals sector on HOSE has been broadly weak amid regulatory scrutiny and input cost pressures.

Strategic Significance

The expanded criminal investigation signals deep governance failures at DGC, potentially affecting its operating licenses, customer relationships, and access to financing. The simultaneous profit decline — with gross margin halving — suggests operational stress beyond legal costs, possibly from disrupted production or higher compliance expenses. For long-term investors, the key risk is whether the company can maintain its market position and regulatory standing while leadership is in flux.

What to Watch

• Outcome of the criminal cases and any additional prosecutions or penalties.
• Q3 2026 earnings release for signs of operational stabilization or further deterioration.
• Any changes in DGC’s board composition or management appointments.
• Regulatory actions regarding DGC’s mining and environmental permits.
• Foreign ownership trends and any delisting or trading suspension risks.