BSR - Strong Q4 results despite declining oil price during Q4, 2023 results in line with our expectations

BSR released its Q4 2023 results with revenue of VND41.9tn (+4% YoY) and reported NPAT-MI of VND2.3tn (+28% YoY). The YoY increase in Q4 2023 reported NPAT-MI is mainly due to (1) an 11% YoY rise in sales volume and (2) a 1.2 percentage point increase YoY in gross profit margin, driven by higher average crack spreads (the difference between output prices and input prices) in Q4 2023. Furthermore, BSR recorded a write-back of VND604 billion for an inventory provision in Q4 2023, which came as a surprise, despite lower oil prices in Q4 compared to Q3. We attribute this to a conservative provision in Q3.
BSR recorded a solid performance with revenue and reported NPAT-MI completing 106% and 102% of our respective 2023 forecasts. Official NPAT is 73% higher than the revised guidance. In 2023, revenue was VND147.4tn (-12% YoY) and reported NPAT-MI of VND8.5tn (-42% YoY). The YoY drop in 2023 reported NPAT-MI is mainly due to (1) a 3.1 ppts decrease YoY due to the YoY plunge in cracks spreads following 2022's high base, which outweighs (2) a 5% YoY increase in sales volume.
Crack spreads decreased in 2023 following 2022’s high base but remain significantly above the pre-pandemic level as the supply and demand gap of refined products is still wide. We note that the average Singapore gasoline and diesel spreads (a benchmark for Asian refineries) in 2023 are 55% and 73% higher than the pre-pandemic level (2017-2019 average). In 2023, the average Singapore gasoline and diesel spreads declined by 4% YoY and 27% YoY to USD12.0/bbl and USD21.5/bbl, respectively. In Q4 2023, the average Singapore gasoline spread was USD9/bbl (+380% YoY) while the average Singapore diesel spread was USD22/bbl (-30% YoY).
BSR aims to complete its fifth maintenance between March and April 2024 in under 50 days. According to BSR, the duration of maintenance has progressively decreased over the years, starting with 60 days in 2011, followed by 54 days in 2014, 52 days in 2017, and 51 days in 2020. The upcoming fifth maintenance, scheduled for 2024, aims to be completed in less than 50 days. We also note that we forecast this maintenance period to be about 45 days.

BSR’s Q4 2023 & full year 2023 results

VND bn	Q4 2022	Q4 2023	YoY	FY 2022	FY 2023	YoY	% of Vietcap’s 2023F
Brent oil price (USD/bbl) *	89	83	-7%	99	82	-17%	99%
Sales volume ('000 tonnes)	1,846	2,056	11%	7,003	7,350	5%	103%
Revenue	40,407	41,932	4%	167,124	147,423	-12%	106%
COGS	-38,474	-39,404	2%	-151,027	-137,815	-9%	106%
Gross profit	1,933	2,528	31%	16,096	9,608	-40%	101%
Sales and marketing expenses	-312	-356	14%	-909	-1,034	14%	113%
General and admin expenses	-236	-243	3%	-515	-626	22%	114%
Operating profit	1,385	1,929	39%	14,673	7,948	-46%	99%
Financial income	735	959	31%	1,750	2,659	52%	117%
Financial expense	-242	-351	45%	-923	-1,154	25%	108%
Profit before tax	1,908	2,546	33%	15,586	9,485	-39%	103%
NPAT-MI reported	1,774	2,279	28%	14,726	8,511	-42%	102%
			ppts change			ppts change
GPM	4.8%	6.0%	+1.2	9.6%	6.5%	-3.1
SG&A %sales	1.4%	1.4%	+0.1	0.9%	1.1%	+0.3
EBIT Margin	3.4%	4.6%	+1.2	8.8%	5.4%	-3.4
Reported NPAT-MI Margin	4.4%	5.4%	+1.0	8.8%	5.8%	-3.0

Source: BSR, Vietcap (*average prices)