PLX - High inventory provision expense dampens H1 profit

- PLX released H1 2022 results with revenue of VND151tn (USD6.6bn; +77.9% YoY) and NPAT-MI of VND206bn (USD9mn; -90.4% YoY). The revenue growth in H1 2022 was due to surging petroleum prices, while the weak NPAT-MI was due to 1) high and volatile input prices hurting PLX’s profit margin, 2) PLX continuing to source petroleum imports (at high prices) to ensure supply to the domestic market and 3) PLX incurring an inventory provision expense of VND1.1tn (USD48mn) in H1 2022.

- According to PLX, the company conservatively made an inventory provision based on petroleum prices as of July 20, 2022 (Brent oil price at USD102/bbl) instead of based on petroleum prices as of June 30, 2022 (Brent oil price at ~USD110/bbl). As such, PLX incurred a provision expense of VND1.1tn (USD48mn) instead of booking an inventory provision reversal of VND156bn (USD7mn) in H1 2022.