PVS - Weak M&C drags H1 earnings despite strong FSO profit - Earnings Flash
  • 2021-07-28T00:00:00
  • Company Research

- PVS booked H1 2021 results with revenue and recurring NPAT-MI dropping 35.2% YoY and 34.1% YoY, respectively, which was mainly due to a smaller workload for the mechanics & construction (M&C) segment despite strong profit from the FSO segment. In Q2 2021, PVS’s revenue and recurring NPAT-MI declined 44.5% YoY and 38.6% YoY, respectively.

- M&C gross profit in H1 2021 decreased 5.0% YoY and completed 33.3% of our forecast as PVS only had workload from two projects — Gallaf and the Thi Vai LNG terminal — while most revenue/profit from big projects such as Sao Vang-Dai Nguyet (SV-DN) was booked in 2020.

- Notably, income from FSO/FPSO JVs rose 91.5% YoY and completed 80.8% of our 2021F forecast, which we believe was due to the contribution from the new FSO SV-DN and the FPSO Ruby’s day rate remaining high. However, as this FPSO’s day rate renegotiation for 2021 and beyond has not been finalized, we foresee insignificant change to our forecast.

- H1 2021 revenue and recurring NPAT-MI fulfilled 36.6% and 43.5% of our respective full-year forecasts. These results were within our expectation as we anticipate more M&C jobs will come in H2 2021. We foresee insignificant changes to our current forecasts, pending a fuller review. 

Figure 1: PVS’s Q2 2021 results


VND bn

(Unless stated)

Q2 2021

YoY growth %

H1 2021

YoY growth %

% of VCSC’s 2021F

Revenue

3,063

-44.5%

5,677

-35.2%

36.6%

Gross profit

261

6.3%

439

0.6%

40.3%

Sales & marketing exp

-27

21.2%

-50

5.3%

49.3%

General admin (GA) exp (*)

-238

118.6%

-429

84.3%

66.4%

Operating profit (EBIT)

-5

N.M.

-39

N.M.

N.M.

Net financial income

64

-10.4%

140

-23.2%

40.6%

Net financial expense

-14

-64.5%

-33

-55.1%

36.0%

Income from FSO/FPSO JVs

151

17.3%

308

91.5%

80.8%

Net other income/loss

10

-93.4%

53

-70.8%

125.6%

Profit before tax

207

-51.9%

428

-29.5%

42.0%

Tax

-24

-82.9%

-81

-58.4%

36.0%

NPAT

183

-37.2%

347

-15.9%

43.7%

Minority interests

-20

-21.6%

-39

11.7%

45.6%

Reported NPAT-MI

164

-38.6%

308

-18.4%

43.5%

Recurring NPAT-MI (**)

164

-38.6%

308

-34.1%

43.5%


Source: PVS, VCSC estimates. Note: (*) GA expenses surged in H1 2021 because the reclassification of outsourcing costs was previously booked in cost of goods sold. (**) Recurring NPAT-MI excludes the impact of provision expenses for the technical issue at FSO MV12. We treat expense/profit from M&C warranty provisions/reversal (booked in other profit) as a recurring item as this is recurring activity for any contractor.