- 2024-07-31T00:00:00
- Company Research
- PVD released its Q2 2024 results with revenue of USD91mn (VND2.3tn; +50% YoY) and reported NPAT-MI of USD5.5mn (VND130bn; -22% YoY). Revenue growth is mainly due to a 68% YoY increase in drilling revenue, driven by (1) the new contribution from the leased rig (named Hakuryu-11), and (2) 25% YoY higher average day rates of owned rigs, which outweigh the land rig, PVD 11, being out of contract and on standby from mid-April. Revenue growth is also partially driven by a 25% YoY increase in drilling-related services, as the number of contracts increased amid global E&P activities recovery. However, reported NPAT-MI decreased due to (1) a loss from associate companies, which incurred a loss of USD0.2mn vs gain of USD0.8mn in Q2 2023, and was further impacted by (2) a 164% YoY increase in foreign exchange loss, coupled with (2) the high base in Q2 2024 given USD3mn of one-off income from compensation for contract termination.
- In H1 2024, revenue was USD163mn (VND4.0tn; 44% YoY) and reported NPAT-MI was USD12mn (VND296n; 22% YoY). Strong growth in the top line was mainly due to (1) 36% YoY revenue from the drilling segment, bolstered by (i) 30% YoY higher average day rates of owned rigs, (ii) a higher average utilization rate of owned rigs at 99.54%, and (iii) the revenue contribution from one newly leased rig vs 0 in H1 2023, and (2) 33% YoY revenue from well-related services. Nevertheless, as (1) the associate companies made a loss of USD0.6mn (vs a gain of USD1.0mn in H1 2023), and (2) the VND depreciated by about 5% to the USD in H1, PVD recorded a 114% YoY foreign exchange loss, which compresses reported NPAT-MI growth.
- Reported NPAT-MI trailed our expectation mainly due to FX loss, recurring NPAT implies slight downside risk. H1 2024 reported NPAT-MI equivalent to 31% of our full-year forecast. The lower-than-expected reported NPAT-MI is due to (1) a loss of USD0.6mn from associates, vs our full-year forecast gain of USD2.6mn (per PVD, its associate companies often have weak results in H1 due to seasonality; PVD expects its associates to make profit in H2), and (2) higher-than-expected foreign exchange loss of USD4.8mn, vs our full-year forecast loss of USD5.0mn. Adjusting for FX loss, we estimate recurring NPAT-MI of USD15.1mn (+51% YoY), completing 36% of our full-year forecast. As a result, we foresee a slight downside risk to our recurring NPAT-MI forecast, pending a fuller review.
- The acquisition of a second-hand jack-up rig is facing a slight delay compared to PVD’s initial expectation. PVD insists that the acquisition of a second-hand jack-up rig costing USD90mn will be completed before 2026 to ensure timely participation in the Block B drilling campaign. However, progress is slower than the company’s previous anticipation as (1) PVD has not yet received investment approval from PVN and (2) PVD also wants to seek for other jack-up rigs with better investment costs and higher operational efficiency. We currently forecast the new rig to come online in early 2025.
- PVD anticipates a favorable market for jack-up rigs in Southeast Asia. PVD shared that there are only seven drilling rigs under construction in the region, with four being built in China for the domestic market. With only three new rigs expected in the next two years, PVD anticipates that the tight supply will keep day rates high and provide ample drilling opportunities for its fleet through 2026, thereby supporting its upcoming investment plans.
- PVD is preparing for the open bidding on drilling and related service contracts for the Block B project. The first phase requires one jack-up rig and one tender-assisted drilling (TAD) rig to drill five injection wells and about 80 production wells. The USD90mn second-hand jack-up rig that PVD plans to acquire will be primarily used for this project. Additionally, to support well-related services and other projects amid global E&P recovery, PVD is proceeding with the purchase of managed pressure drilling (MPD) equipment (USD8mn) and casing running tool (CRTi ) equipment (USD3.8mn), folllowed by the recent contract signing for a hydraulic workover unit (HWU) of USD8mn in July 2024.
PVD’s H1 2024 results
USD mn | Q2 2023 | Q2 2024 | YoY | H1 2023 | H1 2024 | YoY | % of Vietcap’s 2024F |
Brent oil price (USD/bbl) | 78 | 85 | 9% | 80 | 83 | 4% | 100% |
Jack-up day rate (USD/day) (*) | 75,000 | 94,050 | 25% | 72,450 | 93,925 | 30% | 95% |
Jack-up utilization rate % (*) | 94% | 99% | 4.8 ppts | 97% | 100% | 2.4 ppts | 103% |
Revenue | 60.5 | 91.0 | 50% | 112.9 | 163.0 | 44% | 50% |
COGS | -45.1 | -72.1 | 60% | -87.4 | -125.6 | 44% | 51% |
Gross profit | 15.3 | 19.0 | 24% | 25.5 | 37.4 | 47% | 49% |
Sales & marketing exp | -0.2 | -0.1 | -43% | -0.3 | -0.2 | -34% | 29% |
General admin exp | -6.0 | -6.1 | 2% | -10.7 | -10.8 | 1% | 48% |
Operating profit (EBIT) | 9.2 | 12.8 | 39% | 14.5 | 26.4 | 82% | 49% |
Financial income | 0.3 | 1.6 | 476% | 2.3 | 2.7 | 18% | 49% |
Financial expenses | -3.4 | -5.4 | 59% | -7.6 | -10.4 | 37% | 67% |
In which: interest expense | -2.4 | -2.7 | 15% | -5.3 | -5.6 | 5% | 53% |
Shared profit from associates | 0.8 | -0.2 | -124% | 1.0 | -0.6 | -161% | N.M. |
Net other income/loss | 2.3 | -0.5 | N.M. | 1.7 | -1.0 | N.M. | N.M. |
Profit before tax (PBT) | 9.2 | 8.3 | -10% | 11.9 | 17.1 | 44% | 37% |
Income tax expenses | -2.5 | -3.1 | 24% | -2.9 | -5.8 | 97% | 63% |
NPAT | 6.7 | 5.2 | -22% | 9.0 | 11.3 | 27% | 31% |
Minority interest (MI) | -0.3 | 0.2 | -187% | -0.9 | 0.6 | -173% | 31% |
Reported NPAT-MI | 7.0 | 5.5 | -22% | 9.8 | 12.0 | 22% | 31% |
Recurring NPAT-MI (**) | 6.2 | 7.2 | 15% | 10.0 | 15.1 | 51% | 36% |
EBITDA | 17.9 | 21.8 | 22% | 32.8 | 43.6 | 33% | 48% |
Source: PVD, Vietcap. Note: (*) Vietcap’s estimates; (**) recurring NPAT-MI excludes the impact of provisions for PVEP’s bad debts, reversal of withholding tax (which occurs when jack-up rigs work in Malaysia), science fund reversal, forex losses, and one-off profit.
Powered by Froala Editor