- We cut our target price (TP) for PVS by 3% to VND42,600/share and downgrade our rating from BUY to OUTPERFORM. Our decreased TP is due to our 3% lower aggregate 2024-2028F NPAT-MI (respective changes of -11%/+2%/-3% for 2024/2025/2026F).

- Our lower forecast is mainly due to higher SG&A expenses (to prepare for upcoming projects) and lower profit from FSO/FPSO joint ventures (JVs) outweighing our slightly higher gross profit margin assumption of the EPCI #1 contract of the Block B project. 

- We forecast 2024F NPAT-MI to increase 27% YoY as we anticipate M&C revenue to jump 69% YoY, driven by the recovery of domestic exploration & production (E&P) activities, contributions from new offshore wind power projects, and gross margin assumption to rise to 3.5% vs 1.4% in 2023.

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