DHC Q1 2026 Net Profit Surges 80% as 200 Small Paper Mills Shut

Overview

DHC (Dong Hai Ben Tre) reported a sharp 80% year-on-year increase in Q1 2026 net profit to VND 137 billion, driven by higher paper prices and robust packaging demand. The earnings beat comes as an estimated 200 small paper mills in Phong Khe were forced to close from early 2025 due to environmental standards, reducing total industry capacity by about 22% and tightening supply.

Key Facts

• Q1 2026 net profit attributable to parent company: VND 137 billion, up 80% YoY and up 1% QoQ.
• Q1 2026 net revenue: VND 967 billion, up 17.1% YoY but down 3% QoQ.
• Gross margin expanded to 23.1% from 14% in Q1 2025, a 9 percentage point improvement.
• Paper roll revenue: VND 765 billion (+15% YoY), with average selling price up 13% to VND 10,200/kg.
• Packaging revenue: VND 197 billion (+25% YoY), with volume up 26% to 24,024 units; plant utilization improved from 70% to 89%.
• Industry capacity reduced by an estimated 2 million tonnes/year (22%) due to closure of ~200 small mills in Phong Khe from early 2025.
• DHC declared a 20% cash dividend for FY2025 (10% already paid), versus 10% cash and 20% stock in FY2024.
• Giao Long 3 plant investment: VND 2,250 billion total, with VND 1,605 billion already committed; expected to start operations in Q2 2027, doubling total capacity.

What Happened

DHC released its Q1 2026 financial results showing a significant earnings beat. Net profit rose 80% YoY to VND 137 billion, while revenue increased 17.1% to VND 967 billion. The company attributed the strong performance to higher paper prices and increased packaging demand, both benefiting from a structural supply shortage in the domestic paper industry.

According to BIDV Securities (BSC), the supply shortage stems from the forced closure of approximately 200 small paper mills in Phong Khe, Bac Ninh province, starting in early 2025. These mills failed to meet environmental standards, removing an estimated 2 million tonnes of annual capacity (22% of total industry capacity). As a result, paper demand has exceeded supply for nine consecutive months (July 2025 to present), pushing up prices. DHC’s paper roll average selling price rose 13% YoY to VND 10,200/kg.

Market Context

DHC shares closed at VND 35,350 on May 24, 2026, up 0.86% on volume of 102,500 shares. The stock trades on HOSE. The broader market has been volatile, but DHC’s earnings beat and favorable industry dynamics have supported its relative outperformance. The paper and packaging sector is benefiting from consolidation as smaller, non-compliant producers exit, leaving larger players like DHC to capture market share and pricing power.

Strategic Significance

DHC’s earnings beat reflects the structural shift in Vietnam’s paper industry, where environmental regulation is forcing capacity consolidation. With 200 small mills closed, DHC is well-positioned to benefit from tighter supply and higher prices. The company’s investment in Giao Long 3, which will double capacity by Q2 2027, signals a long-term growth strategy to meet rising demand from export-oriented agriculture and fast-moving consumer goods (FMCG) packaging. The improved packaging plant utilization (from 70% to 89%) indicates operational efficiency gains. However, execution risk remains on the Giao Long 3 timeline and cost control.

What to Watch

• Q2 2026 earnings release to confirm sustained margin expansion and volume growth.
• Progress of Giao Long 3 construction and any updates on commissioning timeline.
• Further regulatory actions against small paper mills that could tighten supply further.
• Paper price trends, especially if demand from export sectors weakens.
• Dividend policy changes or capital raising plans to fund the Giao Long 3 investment.