• We attended PLX’s AGM on April 26. Overall, management anticipates a new decree revising the petroleum sector’s current regulations (Decrees 80, 95, & 83), which potentially allow petrol distributors to set their own prices and may marginally benefit PLX (in our view).
• Shareholders approved conservative 2024 PBT guidance of VND2.9tn (-27% vs actual 2023, equivalent to 57% of our current forecast). This guidance includes the potential one-off loss from the Petrolimex Laos divestment of VND300bn (per our estimate). We see slight downside risk to our 2024 earnings forecast, pending a fuller review.
• Shareholders approved a 2023 cash dividend of VND1,500/share, higher than our current projection of VND1,000/share. Shareholders also approved a 2024 dividend at a ratio of 10% (cash or stock has not been determined yet) vs our forecast for VND2,000 DPS.
• The AGM approved the 2020-2030 business plan, which includes clean energy transition, share capital increase, re-structuring and jet fuel for the Long Thanh International airport. 

Conservative 2024 volume. Total sales volume guidance (including re-exports) of 13.0 million tonnes (-9% vs actual 2023, +1% growth vs 2023 guidance), equivalent to 88% of our current forecast. We attribute this to management’s caution. Historically, PLX’s actual sales volume is higher than its guidance by an average of 7% in 2014-2023. Additionally, the preliminary domestic sales volume for Q1 2024 is 2.6 million tonnes (flat YoY; +6% QoQ), equivalent to 24% of our full-year forecast while Q1 is the low season. Therefore, we foresee insignificant risk in our sales volume forecast, pending a fuller review. 

Conservative 2024 guidance with recurring PBT decrease 12% YoY

Dividend and fund allocation 

• 2023 cash dividend: Shareholders approved PLX to raise 2023 cash dividend guidance to VND1,500/share from VND1,000/share. This is higher than our projection of VND1,000/share
• 2024 dividend payment: Shareholders approved a 10% dividend based on par value. The typer of dividend, cash or stock, has not been determined yet. Our current forecast for the 2024 cash dividend is VND2,000/share, aligning with PLX's historical cash dividend range of VND700-3,200/share over the past eight years, which averages out at VND2,050/share.

We expect that the revision of Decree 80/2023 could provide some slight benefits to PLX. The draft decree, which allows petrol distributors to set their own prices (provided they are lower than the ceiling price), is expected to slightly benefit PLX in the following ways: (1) PLX can set higher prices in remote areas to mitigate losses (previously, they had to subsidize to some extent) and (2) set higher prices in less competitive areas to improve margins. The new decree is anticipated to be approved in H2 2024 (according to UPCOM: OIL).

PLX targets to finish the Petrolimex Laos divestment in 2024, aligning with its guidance as set at 2022 EGM. In line with its strategic restructuring, PLX plans to divest PGCC, Petrolimex Laos, and PTC. These divestments are part of PLX's broader effort to streamline its operations and focus on core business areas. Via discussion with management, we estimate a potential one-off loss of VND300bn from the Petrolimex Laos divestment.

PLX continues its plan to increase share capital,  as set at its December 2022 EGM. The target for share capital has been set at VND20tn, which is ~50% higher than current share capital. PLX plans to using its additional-paid-in-capital to increase its share capital. Therefore, we anticipate that State ownership will remain at 75.87% and there will be no EPS dilution. 

Figure 1: PLX’s 2021-2025 business plan

Source: PLX, Vietcap (* based on PLX’s 2024 AGM materials; ** based on PLX’s December 2022 EGM)

PLX set an ambitious targets to transform its business towards clean energy. The company aims to achieve 50% of its revenue from clean and environmentally friendly fuel and energy products by 2030. This ambitious target signifies a significant shift in their product portfolio. Additionally, PLX has set a long-term goal of reaching 100% clean energy revenue by 2045. 

Chage in Board of Directors (BOD) and Board of Supervisors (BOS):

• Board of Directors:

1. Mr. Tran Tuan Linh (Commission for Management of State Capital at Enterprises nominee): Currently serving as the Head of the Strategy and Investment Department on the Board of Directors of Petrolimex. 
2. Mr. Endo Tsuyoshi (ENEOS Nominee): Currently serves as General Director of ENEOS Vietnam Co., Ltd. 
3. Mr. Dinh Thai Huong (Independent candidate introduced by the Board of Directors): Formerly served as a member of the Party Committee of Petrolimex and Chairman of Petrolimex before retiring in 2020. 

• Board of Supervisors:

1. Mr. Okuma Atsushi (ENEOS nominee): Currently serves as Assistant General Director of ENEOS Vietnam Co., Ltd.
2. Mr. Mai Viet Dung (Shareholders nominee): Currently holds the position of Deputy Head of Risk Management Department at Petrolimex.

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