- 2024-04-26T00:00:00
- Company Research
- PVS released strong Q1 2024 results with revenue of VND3.7tn (flat YoY) and reported NPAT-MI of VND301bn (+41% YoY). The strong bottom line is mainly due to (1) a 1.5 ppts YoY increase in blended gross profit margin, driven by a 5.5/5.6 ppts YoY improvement in GPM of the supply base/operation & maintenance segments, respectively; and (2) 25% YoY higher income from floating oil storage joint ventures (FSO/FPSO JVs) due to a renewed contract for one FSO/FPSO with a higher day rate (details are not yet available). These significantly outweigh the seasonally weak mechanical & construction revenue booking which made consolidated revenue complete only 13% of our 2024 forecast.
- Q1 2024 reported NPAT-MI is above our expectation and is equivalent to 27% of our full-year forecast. We foresee slight upside potential to our earnings forecast, which comes from the FSO/FPSO segment as well as lower-than-expected financial expenses, pending a fuller review.
- According to industry players, PVS is preparing to sign a full EPCI#1 contract for Block B after its Limited Letter of Agreement expires end of April. We expect PVS to secure a total of six contracts from Block B. We forecast revenue from these six contracts to be USD5.7bn and NPAT at USD338mn in 2024-2050F, contributing 15%-40% to PVS’s 2024-2028F NPAT-MI.
- We reiterate our BUY rating for PVS with a target price of VND47,800/share.
Figure 1: PVS’s Q1 2024 results
VND bn | Q1 2023 | Q1 2024 | YoY | % of Vietcap’s 2024F |
Revenue | 3,704 | 3,710 | 0% | 13.1% |
Gross profit | 204 | 258 | 27% | 15.1% |
Sales & marketing exp | -20 | -22 | 11% | 19.4% |
General admin (GA) exp | -170 | -205 | 21% | 21.2% |
Operating profit (EBIT) | 14 | 32 | 123% | 5.0% |
Net financial income | 147 | 151 | 3% | 31.4% |
Net financial expense | -51 | -14 | -73% | 5.9% |
Income from FSO/FPSO JVs | 157 | 197 | 25% | 28.5% |
Net other income/loss | 0 | 3 | -1114% | N.M. |
Profit before tax (PBT) | 267 | 368 | 38% | 23.6% |
NPAT | 228 | 305 | 34% | 25.0% |
Reported NPAT-MI | 215 | 301 | 40% | 26.6% |
Recurring NPAT-MI (*) | 214 | 301 | 41% | 26.6% |
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/reversals (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 | Q1 2023 | Q1 2024 | YoY | % of Vietcap’s 2024F |
Revenue | 3,704 | 3,710 | 0% | 13.1% |
Offshore support vessels (OSV) | 336 | 422 | 25% | 25.6% |
FPSO/FSO management services | 447 | 547 | 22% | 24.3% |
Seismic survey and ROV | 26 | 105 | 308% | 19.2% |
Supply base | 296 | 335 | 13% | 22.0% |
Mechanics & construction (M&C) | 2,131 | 1,802 | -15% | 9.5% |
Operation & maintenance (O&M) | 384 | 397 | 3% | 18.0% |
Others | 83 | 101 | 21% | 9.6% |
Gross profit | 204 | 258 | 27% | 15.1% |
OSV | 39 | 47 | 22% | 24.0% |
FPSO/FSO management services | 35 | 22 | -37% | 12.2% |
Seismic survey and ROV | -11 | 12 | N.M. | 25.4% |
Supply base | 55 | 81 | 46% | 23.0% |
M&C | 71 | 52 | -27% | 7.8% |
O&M | 11 | 33 | 213% | 15.8% |
Others | 5 | 11 | 126% | 20.8% |
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| ppts change |
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Gross profit margin % | 5.5% | 7.0% | 1.5 ppt |
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OSV | 11.6% | 11.3% | -0.3 ppt |
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FPSO/FSO management services | 7.8% | 4.0% | -3.8 ppt |
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Seismic survey and ROV | -44.5% | 11.9% | N.M. |
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Supply base | 18.6% | 24.1% | 5.5 ppt |
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M&C | 3.3% | 2.9% | -0.4 ppt |
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O&M | 2.7% | 8.3% | 5.6 ppt |
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Others | 5.8% | 10.9% | 5.0 ppt |
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Source: PVS, Vietcap.
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