DGC Q1 Profit Plunges 49% to 5-Year Low on Cost Surge, Mine Suspension

Overview

Duc Giang Chemicals (DGC) reported a 49% drop in Q1 net profit to VND 409 billion, the lowest quarterly profit since Q3 2021, as revenue declined 24% to VND 2,125 billion. The sharp earnings miss was driven by rising input costs for sulfur, electricity, coke, and ammonia, and the suspension of Mine 25 following a criminal investigation into Chairman Dao Huu Huyen and his son. The stock closed at VND 56,000 on April 15, down 1.07% on HOSE.

Key Facts

• Q1 2026 net profit attributable to parent company: VND 409 billion, down 49% YoY.
• Q1 revenue: VND 2,125 billion, down 24% YoY.
• Gross margin fell to 23% from 34.8% a year earlier, the lowest in six years.
• Mine 25 (Lao Cai) suspended operations since March 17, 2026, due to a criminal investigation into illegal waste dumping and mining.
• Chairman Dao Huu Huyen and his son, Vice Chairman Dao Huu Duy Anh, were detained on March 17, 2026.
• Cash and bank deposits totaled VND 11,255 billion as of March 31, down from VND 13,106 billion at year-end 2025, still representing 62% of total assets.
• The company has not yet released its audited 2025 financial statements, missing the March 30 deadline, and has requested an extension.

What Happened

Duc Giang Chemicals (DGC) reported its Q1 2026 financial results, revealing a steep decline in profitability. Revenue fell 24% year-on-year to VND 2,125 billion, while net profit attributable to parent company shareholders dropped 49% to VND 409 billion—the lowest quarterly profit in nearly five years. The company attributed the decline to rising input costs for key raw materials such as sulfur, electricity, coke, and ammonia, which increased significantly compared to the same period last year.

Additionally, Mine 25 in Lao Cai province was suspended on March 17, 2026, following a criminal investigation by the Ministry of Public Security into Chairman Dao Huu Huyen and his son, Vice Chairman Dao Huu Duy Anh, for alleged illegal waste dumping and mineral exploitation. The suspension forced DGC to rely entirely on imported and externally purchased ore for its yellow phosphorus production, raising cost of goods sold. The company noted that cost of goods sold fell only 10%, far less than the revenue decline, compressing gross margin to 23% from 34.8% a year ago.

Market Context

DGC shares closed at VND 56,000 on April 15, 2026, down 1.07% on volume of 332,600 shares. The stock has been under pressure since the March 17 announcement of the chairman’s detention. The chemicals sector on HOSE has been mixed, with DGC’s earnings miss highlighting operational risks tied to regulatory and legal issues. The company’s cash position remains strong at VND 11,255 billion, but the suspension of Mine 25 and the delayed audited 2025 financials add uncertainty.

Strategic Significance

The Q1 results underscore DGC’s vulnerability to disruptions in its low-cost apatite ore supply from Mine 25, which has historically provided a significant cost advantage. Vietcap Securities noted that DGC’s self-supplied ore from Mines 19B and 25 costs substantially less than market prices. The criminal probe into top management and the mine suspension could lead to prolonged operational constraints, potentially eroding DGC’s competitive edge in yellow phosphorus production. The delayed audited financials and annual general meeting further cloud near-term visibility.

What to Watch

• Outcome of the criminal investigation and any potential impact on Mine 25’s operating license.
• Release of audited 2025 financial statements, now overdue by over 30 days.
• Annual general meeting rescheduled for June 30, 2026, and any board changes following the extraordinary meeting on May 8.
• Q2 2026 earnings report to gauge whether cost pressures persist and if alternative ore sourcing can stabilize margins.
• Regulatory developments from the State Securities Commission and HOSE regarding the delayed filings.