- We raise our target price (TP) for PVD by 10% and upgrade our rating from OUTPERFORM to BUY. Our higher TP is mainly due to our 10% higher projected aggregate 2024-2028F reported NPAT-MI forecast (respective changes of -1%/+8%/+9%/+12%/+13% for 2024/25/26/27/28F).

- Our higher forecast is mainly from incorporating an additional rig in PVD’s fleet at the end of 2024 as management shows confidence in acquiring a secondhand rig with a budget of ~USD90mn (25% lower than our estimate). This rig is expected to be leased at a day rate of USD120,000 (~10% higher than our estimates) and yield a four-year payback period. This beats our expectations in all aspects due to an extremely tight and scarce rig supply. PVD also secured contracts for this rig as well as its financing, and no capital raising is required. PVD anticipates PetroVietnam (PVN)’s final approval for the investment soon after addressing inquiries on oil price volatility and industry cycles. We estimate for this rig to generate an IRR of 18% and an average NPAT of USD9mn p.a. in 2025-2028F (~9% of PVD’s NPAT p.a.).

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