DRI stock faces major challenges.

The surge in the share price of Dak Lak Rubber Investment Joint Stock Company (DRI) at the beginning of the year encouraged insider shareholders and the parent company to register to sell large quantities of shares.

The surge in the share price of Dak Lak Rubber Investment Joint Stock Company (DRI) at the beginning of the year encouraged insider shareholders and the parent company to register to sell large quantities of shares.

Dak Lak Rubber Investment's rubber plantation in Laos is located in an area prone to tornadoes, resulting in many trees being broken or uprooted. Photo: Le Toan

The parent company wants to reduce its ownership to 36% of the charter capital.

In early 2025, with natural rubber prices continuing to rise and the improved business results of natural rubber companies in the second half of 2024, there is a tendency for capital to flow in and push up the share prices of this group.

From January 13th to March 4th, 2025, the group of four natural rubber stocks, including DPR (Dong Phu Rubber Joint Stock Company), PHR (Phuoc Hoa Rubber Joint Stock Company), TRC ( Tay Ninh Rubber Joint Stock Company), and DRI (Dak Lak Rubber Investment Joint Stock Company), increased in price by 38.2% in less than two months.

Specifically for Dong Phu Rubber and Phuoc Hoa Rubber, in addition to benefiting from the increase in natural rubber prices, they also benefit from the potential for converting rubber land to industrial land, as the planning of Binh Duong and Binh Phuoc provinces has been approved and industrial real estate projects on existing rubber plantations have been announced.

Specifically, according to the Binh Duong Provincial Planning for the period 2021-2030, Phuoc Hoa Rubber Plantation can convert a total of 2,800 hectares of rubber land into industrial zone land, and approximately 1,150 hectares into urban area land and other uses. Meanwhile, Dong Phu Rubber Plantation has the potential to convert rubber land to industrial use when expanding the North Dong Phu Project to 317 hectares and the South Dong Phu Project to 480 hectares.

Meanwhile, Dak Lak Rubber Investment mainly benefits from the natural rubber industry boom, thereby increasing its valuation. Specifically, with a 33.6% price increase from January 13th to March 4th, from VND 11,900 to VND 15,900 per share, DRI shares are currently trading at a P/E valuation of 10.69 times, higher than the normal period of 6.25 to 6.8 times in 2021-2022, and a P/B valuation of 1.99 times, higher than the normal period of 0.49 to 1.25 times in 2016-2022.

With valuations no longer low, it's understandable that after the initial surge at the beginning of the year, DRI shares have shown signs of stabilizing around 15,700 - 16,700 VND per share for more than a week now. Simultaneously, a number of executives and major shareholders have shown intentions to sell large quantities of shares.

Specifically, Ms. Nguyen Thi Hai, Deputy General Director of Dak Lak Rubber Investment, registered to sell all 175,000 DRI shares, equivalent to 0.24% of the charter capital, from February 25th to March 26th; Mr. Bui Quang Ninh, Vice Chairman of the Board of Directors and independent member of the Board of Directors, registered to divest all 150,000 DRI shares, equivalent to 0.2% of the charter capital, from February 25th to March 20th.

Specifically, the parent company of Dak Lak Rubber Joint Stock Company (DRG) also registered to sell 18.19 million DRI shares to reduce its ownership from 60.84% ​​of the charter capital to 36%. The transaction will be carried out from February 3rd to March 4th (the results of the offering have not yet been announced). If the divestment is successful, Dak Lak Rubber will no longer be the parent company shareholder of Dak Lak Rubber Investment, changing the accounting method from investment in a subsidiary to investment in an associate company.

Difficulty attracting workers.

Dak Lak Rubber Investment operates primarily in the fields of rubber tapping, processing, and fruit tree cultivation. The company manages rubber plantations in two provinces (Laos), Champasak and Salaval, through its subsidiary, covering a total area of ​​10,186.6 hectares. The productivity of the company's rubber plantations is not high due to the trees being planted in areas frequently affected by tornadoes, resulting in significant tree damage.

With approximately 86% of Dak Lak Rubber Investment's total rubber plantation area planted between 2005 and 2008, and the average age of the trees ranging from 17 to 20 years, the company's rubber plantations will continue to yield high productivity in the coming years. However, in the long term, over the next 5-7 years, the company will face pressure to plant and care for new trees as they age, yield decreases, and new investment costs increase.

According to Phu Hung Securities Company, although the rubber trees are in the harvesting stage, Dak Lak Rubber Investment is facing difficulties due to a labor shortage, and the Lao currency is continuously depreciating, leading workers here to tend to move to work in Thailand. Therefore, maintaining a workforce at the company's rubber plantation is proving challenging.

To address the labor issue, Dak Lak Rubber Investment has shared its plans to pay workers in USD, provide material bonuses, and improve their living conditions. However, with the strengthening of the USD in early 2025, the risks to the company continue to increase regarding the depreciation of the local currency in Laos and the issue of retaining workers.

Source: https://baodautu.vn/co-phieu-dri-dung-truc-thach-thuc-lon-d251254.html