A strong financial foundation and abundant cash flow: bring many advantages to PVCFC, helping the company maintain stability and expand operations effectively as: ensuring short-term and mediumterm liquidity; reducing dependence on external borrowing; investing in upgrading factories and expanding production lines to boost productivity and diversify products; implementing support programs for agents and customers to expand market share without significantly affecting cash flow; investing in logistics, warehousing, and agents in new markets; maintaining a stable dividend policy, which increases the value of DCM shares in the market.

Proactive in securing input raw materials: PVCFC plant is supplied with stable, long-term gas from PVN and its partners, ensuring continuous and stable production. The Ca Mau NPK plant receives a supply of urea from the internal value chain, providing an advantage over other companies in the market. Additionally, the Company proactively signs long-term cooperation agreements with both domestic and foreign partners to ensure a more favorable supply of raw materials for NPK production.

Optimization through scale advantages Recently, with increased operating capacity and higher production volumes of both urea and NPK, the Company has gradually achieved economies of scale, reducing unit production costs at its affiliated plants and further improving overall business efficiency; taking advantage of an extensive logistics network helps reduce transportation costs per unit of product; a large network of agents enables PVCFC to optimize marketing and sales expenses in various markets.

A strong distribution system: A widespread level 1 and level 2 distribution network, especially in the Mekong Delta and Cambodia, helps optimize revenue and business efficiency. In particular, the addition of Korea-Vietnam Fertilizer Company has further consolidated the value chain by ensuring the supply of goods in key markets and enhancing the ability to capture market share, especially as NPK’s market share grows faster than before.

Strong application of information technology:With robust investment in IT over many years, PVCFC has built a modern management system equipped with advanced tools and software such as ERP, Big Data, DMS, and CMS, thereby enhancing the efficiency of sales management and the supply chain. In recent years, the Company has further increased the use of AI platforms and data analytics to improve overall operational efficiency throughout the system - internally as well as for customers and farmers - reducing actual operating time while enhancing the customer experience with new applications.

High production costs:Compared to some other countries such as the Middle East, the Baltic states, and Southeast Asia, the production costs of Vietnamese fertilizer manufacturers in general - and PVCFC in particular - are at a disadvantage due to the proximity of raw material sources like natural gas in regions such as the Middle East and the Baltic. The resources are easier to extract, transport, and come at a lower cost, resulting in lower per-unit production costs. This is a factor that is difficult to overcome in the long term, making PVCFC’s competition in the international market against producers in those regions more challenging

Sales, marketing, and logistics costs tend to increase:The company is in a phase of rapid expansion and development, leading to rising sales, marketing, and logistics expenses. Due to intense competitive pressure in the domestic fertilizer industry, in order to maintain longterm partnerships with agents and farmers, the company implements numerous major initiatives and programs such as discounts, promotions, sales incentives, and customer gifts, which in turn drive up sales and marketing costs. Additionally, some other expenses are difficult to reduce, such as warehousing and transportation costs, as these are inherently tied to the circulation of goods. However, with the implementation of the VAT law from July 1, 2025, it is expected that some related expenses will be deductible, helping to lower the company’s overall costs.

Profit volatility: The company’s profits have tended to decline in recent quarters, primarily due to fluctuations in output prices and a sudden surge in profit margins in previous years. This is understandable in the context of revenue and profits peaking in 2022, but then sharply falling by 40-50% in the subsequent years, leading to a significant drop in revenue. Additionally, as mentioned, rapid increases in input costs and sales expenses in some quarters have also contributed to the decline in profits. However, with some new drivers emerging in 2025, it is expected that the unit’s profit margin will improve in the near future.

From July 1, 2025, according to the amended Value Added Tax (VAT) Law, fertilizer products in Vietnam will shift from being tax-exempt to being subject to a 5% VAT rate. This change will help reduce production costs and create a more favorable environment for manufacturers in the industry; the deduction of input tax will help businesses reduce costs, lower product prices, and enhance competitiveness compared to imported fertilizers; it also encourages investment in technological innovation, production expansion, product quality improvement, and meeting market demand. Overall, this law is expected to help improve the Company’s profit margins compared to the previous period.

Leading market position:As the leading fertilizer producer in Vietnam, PVCFC strives to be at the forefront of the market in the production and supply of a diverse range of fertilizer products. By expanding production at the Ca Mau NPK plant and acquiring the Korea-Vietnam NPK plant, the Company has significantly increased its inventory to meet diverse domestic and international demand.

Expanding export markets:In recent years, PVCFC has actively participated in the international export market thanks to the advantages of its granular urea fertilizer being more popular; higher export prices at certain times; and large purchase orders, which enable PVCFC to seize and take advantage of opportunities. In preliminary terms, over the past five years, PVCFC has exported more than 1 million tonnes of urea to over 20 major markets worldwide. Moving into Q1 2025, PVCFC organized the export of more than 100,000 tonnes to Australia and is expected to negotiate with additional partners to carry out subsequent export shipments.

Stable domestic and international fertilizer demand: With the domestic economy oriented toward exports, Vietnam’s key agricultural products receive significant investment and attention to boost export turnover and enhance value for farmers. This not only supports the development of the agricultural sector but also impacts related industries, including fertilizers, logistics, and processing. According to recent updated data, Vietnam’s strategic agricultural exports have achieved many significant successes in the market, with key highlights including: Rice – Vietnam is the world’s second-largest rice exporter (after India), with main markets including the Philippines, China, and Indonesia; Vietnam is the largest exporter of Robusta coffee in the world with an annual output of over 1.7 million tonnes, with main markets in Europe, the US, and Japan; Vietnamese pepper accounts for 40% of global pepper exports, with major markets in the US, EU, India, and the Middle East; cashew nut exports amount to about 600,000 tonnes per year, maintaining Vietnam’s position as the world’s number one cashew exporter; and Vietnamese rubber ranks third in global rubber exports (after Thailand and Indonesia), with main markets including China, the EU, and the US. It can be said that investment in agricultural exports helps stabilize and increase fertilizer demand, particularly for NPK, organic, and bio-fertilizers to meet export standards. In addition, the Government’s tax incentives and financial support policies for the agriculture sector indirectly help reduce input costs for farmers and stimulate fertilizer consumption. The trend of expanding the agricultural export market also means that PVCFC can further boost fertilizer exports to Southeast Asian countries such as Cambodia, Thailand, and the Philippines.

International competition:Competition from producers with lower costs in the Middle East and Southeast Asia puts pressure on PVCFC’s market share and pricing. Competitive pressure arises both domestically and internationally. Domestically, the large number of producers in the industry—not to mention the number of importers and distributors—creates intense internal competition, especially in terms of pricing, which remains a persistent and unsolvable issue. This requires PVCFC to proactively increase exports and build a strong, loyal, long-term customer base to maximize the consumption of production from its affiliated plants. Additionally, in the current international competitive context, the availability of cheaper, higher-quality imported products also poses significant risks of losing market share and customers to rival companies.

High input price volatility:Sự thay đổi giá khí Changes in the prices of natural gas and other raw materials can affect the Company’s production costs and profits. Natural gas accounts for a large share of the cost of urea production, as it is the hydrogen source used in the synthesis of ammonia (NH₃), a precursor for urea. Natural gas prices can be highly volatile due to influences from the crude oil market, global supply and demand, and the energy policies of major countries. In practice, PVCFC purchases gas from PV GAS under long-term contracts, but the gas price still adjusts according to market fluctuations. This is a major source of potential volatility, especially in the current complex geopolitical situation, with ongoing conflicts between Russia and Ukraine; persistent instability in the Middle East with no signs of cooling down; and changing U.S. policies, particularly regarding new tariff measures expected to remain contentious issues internationally in the near future

Climate change:is creating significant challenges for the fertilizer industry and PVCFC, affecting market supply and demand, production costs, and long-term development strategies. PVCFC’s main market is in the Mekong Delta, an area that is strongly affected by drought and saltwater intrusion due to climate change. As saltwater intrusion deepens, farmers reduce their rice planting areas, thus lowering the demand for fertilizers and impacting the Company’s market share in this region. Other adverse weather phenomena, such as heatwaves and floods, also negatively impact the agricultural sector, subsequently reducing fertilizer demand in various regions.