- We increase our target price (TP) for PVS by 7.6% to VND40,900/share and upgrade our rating from OUTPERFORM to BUY. Our increased TP is due to our 5.2% higher aggregate 2023-2027F reported NPAT-MI (respective changes of 0.6%/-2.7%/5.8% for 2023/2024/2025) and higher terminal growth rate assumption.

- We raise our 2023-2027F aggregate reported NPAT-MI by 5.2% as we increase our 2023-2027F aggregate mechanical & construction (M&C) backlog assumption by 9.4% to USD5.5bn. We increase the M&C contract value for Block B from USD1bn to USD1.7bn as we factor in two M&C contracts for offshore and onshore gas pipelines (total contract value of USD700mn). This incorporation outweighs decreasing our M&C contract value assumption for the Thi Vai LNG Terminal – Phase 2 from USD300mn to USD100mn following PVS’s recent guidance.

- We increase our terminal growth rate assumption from 3% to 4% to factor in the potential USD4.2bn contract value for Block B’s Phase 2, as mentioned in our Energy Sector Update, published July 24, 2023.

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