PVS - Block B and Yellow Camel on track; White Lion phase 2B progress slower than expected, slight downside risk - Earnings Flash
  • 2024-10-29T00:00:00
  • Company Research
  • PVS released its Q3 2024 results with revenue of VND4.8tn (+15% YoY) and reported NPAT-MI of VND134bn (-5% YoY). While the NPAT before MI rose to VND192bn (+34% YoY), the decline in reported NPAT-MI was mainly due to a surge in minority interest, driven by Geophysical Survey Company Limited’s (PTSC CGGV) performance. PVS holds a 51% stake in PTSC CGGV, which posted a significant turnaround with NPAT of VND91bn in Q3 2024 (compared to a loss of VND35bn in Q3 2023).
  • Strong growth in NPAT before MI was mainly due to (1) a 2.6 ppts YoY increase in blended gross profit margin (GPM), driven by an 8.5/4.1 ppts improvement in GPMs of the FPSO/FSO management services, and mechanical & construction (M&C) segments, respectively. The (2) 20% higher YoY income from floating oil storage joint ventures (FSO/FPSO JVs) also supported this NPAT before MI growth.
  • In 9M 2024, revenue was VND14.1tn (+12% YoY) and reported NPAT-MI was VND631bn (+9% YoY). The reported NPAT before MI of VND707bn (+17% YoY) was mainly due to (1) the 46% YoY surge in gross profit and (2) the 27% higher YoY income from FSO/FPSO JVs, outweighing (3) the 98% surge in financial expenses due to forex losses.
  • PVS’s 9M profitability improved: 9M 2024 blended GPM rose to 5.9% (up 1.4 ppts YoY), driven by (1) a 1.8 ppts YoY increase in FPSO/FSO management services and (2) a 0.4 ppts YoY increase in the M&C segment, coupled with (3) a 2.1 ppts YoY increase in the O&M segment. These factors outweigh the weak performance of (4) seismic surveying and remotely operated vehicles (ROVs) with a decrease of 4.7 ppts YoY and (5) a 1.8 ppts YoY decrease in the supply base.
  • 9M 2024 results slightly trail our expectations, completing 54% and 56% of our 2024 respective full-year revenue and reported NPAT-MI forecasts. We note that M&C business revenue and profit are typically recognized in Q4. That being said, we see ~10-15% downside risk to our M&C revenue forecast due to slower-than-expected progress of White Lion phase 2B (which PVS might win contracts for in H1 2025 vs our previous expectation of Q4 2024). As of September 30, PVS received VND587bn for Yellow Camel while Block B’s EPCI 1 official groundbreaking in early September should contribute more significant revenue in Q4.
  • Overall, we foresee slight downside risks to our earnings forecast, pending a fuller review. This is due to lower-than-expected revenue from the M&C segment, while the margins from seismic surveying and ROVs may offset the higher-than-expected income from FSO/FPSO JVs.

Figure 1: PVS’s 9M 2024 results

VND bn

Q3 2023

Q3 2024

YoY

9M 2023

9M 2024

YoY

% of Vietcap’s 2024F

Revenue

4,176

4,820

15%

12,591

14,101

12%

54%

Gross profit

181

333

84%

572

833

46%

54%

Sales & marketing exp

-22

-22

2%

-59

-65

10%

62%

General admin (GA) exp

-262

-222

-15%

-664

-739

11%

71%

Operating profit (EBIT)

-103

88

-186%

-151

28

-119%

7%

Net financial income

211

84

-61%

515

374

-27%

78%

Net financial expense

-47

-166

254%

-113

-224

98%

200%

Income from FSO/FPSO JVs

178

214

20%

512

648

27%

83%

Net other income/loss

-22

-12

-44%

13

32

154%

N.M.

Profit before tax (PBT)

217

208

-4%

775

858

11%

56%

NPAT

144

192

34%

606

707

17%

59%

Reported NPAT-MI

141

134

-5%

580

631

9%

56%

Recurring NPAT-MI (*)

181

267

47%

614

719

17%

56%

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. We also exclude the impact of forex losses.

Figure 2: PVS’s revenue, gross profit, and gross margin breakdown in 9M 2024

VND bn

Q3 2023

Q3 2024

YoY

9M 2023

9M 2024

YoY

% of Vietcap’s 2024F

Revenue

4,176

4,820

15%

12,591

14,101

12%

54%

Offshore support vessels

398

568

43%

1,125

1,622

44%

78%

FPSO/FSO management services

527

617

17%

1,497

1,728

15%

77%

Seismic surveying and ROVs

152

175

15%

219

401

83%

73%

Supply base

313

423

35%

975

1,064

9%

70%

Mechanics & construction

2,119

2,406

14%

7,085

6,809

-4%

42%

Operation & maintenance

478

998

109%

1,222

1,988

63%

90%

Others

188

-375

-299%

467

489

5%

36%

Gross profit

181

333

84%

572

833

46%

54%

Offshore support vessels

40

64

61%

122

167

36%

73%

FPSO/FSO management services

0

53

N.M.

59

99

67%

73%

Seismic surveying and ROVs

31

-21

-169%

27

30

12%

42%

Supply base

95

73

-23%

213

214

0%

61%

Mechanics & construction

-12

84

N.M.

87

108

24%

22%

Operation & maintenance

15

46

3.2x

45

115

157%

58%

Others

13

45

3.5x

18

100

4.5x

133%

 

 

 

Δ ppts

 

 

Δ ppts

 

Gross profit margin %

4.3%

6.9%

2.6

4.5%

5.9%

1.4

 

Offshore support vessels

10.0%

11.2%

1.3

10.9%

10.3%

-0.6

 

FPSO/FSO management services

0.0%

8.5%

N.M.

4.0%

5.7%

1.8

 

Seismic surveying and ROVs

20.2%

-12.0%

-32.2

12.1%

7.4%

-4.7

 

Supply base

30.2%

17.3%

-13.0

21.9%

20.1%

-1.8

 

Mechanics & construction

-0.6%

3.5%

4.1

1.2%

1.6%

0.4

 

Operation & maintenance

3.1%

4.6%

1.6

3.7%

5.8%

2.1

 

Others

6.8%

-11.9%

-18.7

3.8%

20.4%

16.5

 

Source: PVS, Vietcap

Powered by Froala Editor