- 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% |
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| Δ ppts |
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| Δ ppts |
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Gross profit margin % | 4.3% | 6.9% | 2.6 | 4.5% | 5.9% | 1.4 |
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Offshore support vessels | 10.0% | 11.2% | 1.3 | 10.9% | 10.3% | -0.6 |
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FPSO/FSO management services | 0.0% | 8.5% | N.M. | 4.0% | 5.7% | 1.8 |
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Seismic surveying and ROVs | 20.2% | -12.0% | -32.2 | 12.1% | 7.4% | -4.7 |
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Supply base | 30.2% | 17.3% | -13.0 | 21.9% | 20.1% | -1.8 |
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Mechanics & construction | -0.6% | 3.5% | 4.1 | 1.2% | 1.6% | 0.4 |
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Operation & maintenance | 3.1% | 4.6% | 1.6 | 3.7% | 5.8% | 2.1 |
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Others | 6.8% | -11.9% | -18.7 | 3.8% | 20.4% | 16.5 |
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Source: PVS, Vietcap
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