- 2024-01-30T00:00:00
- Company Research
- PVS announced its Q4 2023 results with revenue of VND6.8tn (+28% YoY) and reported NPAT-MI of VND286bn (-39% YoY). The significant drop in NPAT-MI is caused by 1) 2.5x YoY higher GA expenses (due to high expenses preparing for upcoming projects) and 2) 54% YoY lower net other income/loss (due to a lower warranty reversal). PVS reversed a VND79bn warranty reversal in Q4 2023 vs a VND135bn warranty provision in Q4 2022. These two factors outweigh strong revenue growth.
- In 2023, PVS recorded revenue of VND19.3tn (+18% YoY) and reported NPAT-MI of VND866bn (-2% YoY). The mechanical & construction (M&C) segment is the main driver of 2023 revenue with 28% YoY growth, beating our revenue forecast by 36%. The strong revenue growth is supported by contributions of the offshore wind M&C contracts (+3x YoY, as per PVS). In addition, the M&C gross profit margin of 1.4% is higher than our assumption of 1.2%. However, NPAT-MI edged down by 2% YoY mainly due to 1) 27% YoY higher GA expenses (due to high GA expenses in Q4), 2) 64% YoY lower net other income/loss, and 3) a decreased M&C gross profit margin YoY. Regarding the second reason, PVS recorded a one-off profit of VND50bn from asset liquidation in Q1 2022 vs no one-off profit in 2023, and a higher warranty provision reversal in 2022 vs 2023.
- 2023 NPAT-MI fulfilled 93% of our forecast due to 1) higher-than-expected SG&A expenses, 2) weaker-than-expected performance of the operation & maintenance and supply base segments outweighing stronger-than-expected performance of the M&C and offshore support vessels segments, and 3) lower-than-expected profit from FSO/FPSO joint ventures.
- We foresee potential slight downside risk to our 2024 forecasts, pending a more comprehensive review. We currently have a BUY rating for PVS with a target price of VND43,700/share.
Figure 1: PVS’ Q4 2023 & 2023 results
VND bn | Q4 2023 | YoY | 2023 | YoY | % of Vietcap’s 2023F |
Revenue | 6,758 | 28% | 19,349 | 18% | 114% |
COGS | -6,382 | 30% | -18,401 | 19% | 116% |
Gross profit | 376 | 0% | 948 | 4% | 85% |
Sales & marketing exp | -27 | -2% | -85 | 8% | 114% |
General admin (GA) exp | -386 | 146% | -1,050 | 27% | 119% |
Operating profit (EBIT) | -36 | N.M. | -188 | N.M. | N.M. |
Net financial income | 261 | 112% | 776 | 59% | 132% |
Net financial expense | -102 | 12% | -215 | 32% | 132% |
Income from FSO/FPSO JVs | 153 | -5% | 664 | 1% | 92% |
Net other income/loss | 53 | -54% | 66 | -64% | N.M. |
Profit before tax (PBT) | 328 | -35% | 1,103 | -6% | 85% |
NPAT before MI | 293 | -40% | 899 | -5% | 89% |
Reported NPAT-MI | 286 | -39% | 866 | -2% | 93% |
Recurring NPAT-MI (*) | 286 | -39% | 866 | 4% | 93% |
Source: PVS, Vietcap. Note: (*) Recurring NPAT-MI excludes the impact of provision expenses for the technical issue at FSO MV12 and provision expenses for risk of contract termination of FPSO Lam Son. We treat expenses/profits from M&C warranty provisions/reversal (booked in other profit) as a recurring item, as this is a recurring activity for any contractor.
Figure 2: PVS’ revenue, gross profit, and gross margin breakdown in Q4 2023 and 2023
VND bn | Q4 2023 | YoY | 2023 | YoY | % of Vietcap’s 2023F |
Revenue | 6,758 | 28% | 19,349 | 18% | 114% |
Offshore support vessels (OSV) | 482 | 31% | 1,607 | 2% | 97% |
FPSO/FSO management services | 710 | 43% | 2,207 | 18% | 112% |
Seismic survey and ROV | 186 | 143% | 405 | -21% | 76% |
Supply base | 443 | 0% | 1,418 | -3% | 93% |
Mechanical & construction (M&C) | 4,066 | 26% | 11,151 | 28% | 136% |
Operation & maintenance (O&M) | 688 | 37% | 1,910 | 23% | 88% |
Others | 184 | 1% | 651 | -8% | 70% |
Gross profit | 376 | 0% | 948 | 4% | 85% |
OSV | 76 | 77% | 198 | 37% | 120% |
FPSO/FSO management services | 98 | 274% | 157 | 13% | 100% |
Seismic survey and ROV | 19 | 18% | 46 | 2% | 95% |
Supply base | 48 | -47% | 261 | -20% | 74% |
M&C | 73 | -46% | 160 | -1% | 162% |
O&M | 23 | -11% | 68 | 101% | 35% |
Others | 39 | -4% | 57 | -9% | 61% |
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| ppts change |
| ppts change |
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Gross profit margin % | 5.6% | -1.5 ppts | 4.9% | -0.7 ppts |
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OSV | 15.7% | 4.1 ppts | 12.3% | 3.1 ppts |
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FPSO/FSO management services | 13.8% | 8.5 ppts | 7.1% | -0.3 ppts |
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Seismic survey and ROV | 10.4% | -11.2 ppts | 11.4% | 2.6 ppts |
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Supply base | 10.7% | -9.4 ppts | 18.4% | -4.1 ppts |
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M&C | 1.8% | -2.4 ppts | 1.4% | -0.4 ppts |
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O&M | 3.4% | -1.8 ppts | 3.6% | 1.4 ppts |
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Others | 21.2% | -1.1 ppts | 8.8% | -0.1 ppts |
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Source: PVS, Vietcap
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