PVS – 2023 NPAT-MI slightly trails our forecast – Earnings Flash
  • 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%

 

 

ppts change

 

ppts change

 

Gross profit margin %

5.6%

-1.5 ppts

4.9%

-0.7 ppts

 

OSV

15.7%

4.1 ppts

12.3%

3.1 ppts

 

FPSO/FSO management services

13.8%

8.5 ppts

7.1%

-0.3 ppts

 

Seismic survey and ROV

10.4%

-11.2 ppts

11.4%

2.6 ppts

 

Supply base

10.7%

-9.4 ppts

18.4%

-4.1 ppts

 

M&C

1.8%

-2.4 ppts

1.4%

-0.4 ppts

 

O&M

3.4%

-1.8 ppts

3.6%

1.4 ppts

 

Others

21.2%

-1.1 ppts

8.8%

-0.1 ppts

 

Source: PVS, Vietcap

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