The Dominance of Vietnam in Yellow Phosphorus-Based Chemicals
The Case of Duc Giang Chemicals

In this short post, we discuss Vietnamese Yellow Phosphorus Giant — Duc Giang Chemicals — and its future outlook as of November 2025. We believe this is a high-potential name to consider for an emerging-market portfolio. Whether you are a PM looking to diversify client exposures, or a retail investor expanding your understanding of emerging markets, returns, and risks, this note is worth reading.

Business and industry overview

Business: Duc Giang Chemicals (DGC) is Vietnam's leading vertically integrated producer of yellow phosphorus (P4) and phosphorus-based chemicals, controlling the entire value chain from raw material to diversified, high-value downstream products.

Sources: DGC, BACKD Capital Research Team

Industry: The global chemical industry in 2025 is experiencing slow growth and margin pressure, with production growth forecast at just 1.9–2% in 2026 due to persistent overcapacity and volatile demand in key end markets (automotive, construction, consumer goods). Semiconductor-driven chemicals are expected to remain a key driver, offering targeted growth opportunities even in a slow overall market.

Source: Statista

Vietnam is the world’s largest exporter of phosphorus (and P4 specifically), with export value reaching $268M (2023), and DGC accounts for around 70% of the country’s production capacity and 1/3 of global exports.

Source: Guotai Junan

Duc Giang's supply chain and cost optimization

Apatite ore is the main input in the production of P4 and other phosphate-based products.

DGC self-supplies 80% of its apatite ore demand using high quality ore (i.e. low levels of impurities) from mining areas 19B and 25 in Lao Cai. In the April 2025 AGM, DGC announced bidding for mining licenses for areas 20, 22, and 23 (Lao Cai). This will create an additional 30m tons of apatite ore and will help supply stability in the next 20 years.

Source: Guotai Junan, KB Securities VN, BACKD Capital Research Team

Furthermore, DGC is the only company in the world capable of producing P4 from powdered apatite, which is around 46% cheaper than lump form apatite. The lowered COGS allows DGC a much better margin compared to its peers.

Source: Bloomberg, BACKD Capital Research Team

Management vision for long-term growth

Source: DGC

Duc Giang Chemicals has consistent larger-scale investments, indicating strong belief in the business by the management team.

Financial analysis

Source: DGC, BACKD Capital Research Team

Our valuation

We assume P4 ASP rises 2% annually in 2026–2027, then stabilizes. In 2025, production aligns with management guidance. In 2026–2027, the new factory adds 10% to Food Grade, MAP, Fertilizer, and DCP output, maintaining prior growth rates. We also assume P4 production grows 15.7% in 2026–2027, then declines 5% in 2028–2029.

Source: BACKD Capital Research Team estimate

Risks

We identify five main risks from our assumptions:

• Risk 1: Ambitious projects face high delay risks or unmet revenue goals.
• Risk 2: Dependence on exports makes DGC vulnerable to global shocks and trade restrictions.
• Risk 3: Price recovery of core products is worse than anticipated.
• Risk 4: Vietnam’s 2025 Law on Chemicals may include stricter environmental regulations that increase operating costs.

Overall, if you are considering investing in Vietnam, we view Duc Giang Chemicals as a relatively safer stock compared to more volatile names in financial or real estate sectors, and potentially a diversification benefit in an emerging-market portfolio.

Our financial model for Duc Giang Chemicals can be found here: [excel model]