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DPM [OUTPERFORM +19.1%] - All eyes on progress of NH3-NPK plants - Update

We reiterate our OUTPERFORM rating on DPM despite cutting our target price slightly by 3.0% mainly on a 9.3% reduction in our 2017 earnings forecast. Q1 2017 NPAT dropped 45.1% as a urea price recovery could not make up for increasing input prices as well as an unexpected drop in urea volume due to abnormal weather. 2017 EPS is estimated to decline by 19.0% on expected lower sales volume, soaring input gas price as well as rising selling expenses to develop customer bases for new NPK