We attended PVT’s analyst meeting on August 6, 2024. 

Overall, we foresee slight potential upside to our long-term earnings forecast, pending a fuller review. This is due to (1) new contributions from one oil product/chemical tankers in July 2024 to outweigh our anticipated delay in the company acquiring an Aframax tanker for crude oil transportation to 2025, and (2) slightly higher-than-expected tanker rates for the overseas crude transport segment and the chemicals transport segment, pending a fuller review. 

Market Outlook: 

• Crude oil transportation: Regarding the domestic market, PVT expects H2 2024 to have a better performance vs H1 2024 driven by Binh Son Refinery’s full utilization post-turnaround (Binh Son Refinery is PVT’s largest crude transportation client). This is in line with our expectations. Regarding the overseas market, PVT expects a robust market in 2024 due to tonne-miles demand growth outpacing tanker supply growth. For 2025, despite an increase in the tanker fleet, demand growth still slightly outpaces supply growth, indicating remaining market resilience. Additionally, in 7M 2024, the average Aframax time charter rate (benchmark for crude oil tankers) was 9% YoY. These developments are above our expectations, and we currently forecast the Aframax time charter rate to decrease 11% p.a. in 2024-2025.  

• Oil product/chemical transportation: PVT expects the market to remain favorable in 2024-2025 as tonne-miles demand growth continues to outpace tanker supply growth. In 7M 2024, the Medium Range tanker rate (benchmark for oil product/chemical tankers) was 8% YoY, and the Handymax tanker rate (benchmark for chemical tankers) was 12% YoY. Additionally, Clarkson forecasts the chemical tanker rate to increase by 7%/2%/2% in 2024/2025/2026F, respectively, which is higher than our current projection of 0%/-5%/0%. 

• The LPG & Dry bulk transportation outlook is in line with our expectations. 

Investment pipeline: In H2 2024, PVT plans to acquire a Handymax tanker (20,000 DWT) and a Medium Range tanker (50,000 DWT) for the oil product/chemical tankers segment, three dry bulkers, and one LPG coaster. Notably, PVT has already acquired the 14-year-old NV Apollo (21,300 DWT) for oil product/chemical tankers in July 2024, increasing its fleet capacity by 5% to 467,000 DWT. This acquisition slightly outweighs our anticipated delay in acquiring an Aframax tanker for crude oil transportation to 2025 (as it is not mentioned in PVT's H2 2024 investment pipeline). We believe this 20K DWT oil product/chemical tanker offers higher profitability compared to the Aframax tanker due to its 66% lower investment cost, despite having a time charter rate that is 43% lower. 

Dividends: PVT intends to distribute 20% stock dividends, using earnings from 2022 and 2023, to increase its share capital to VND4,272bn. This plan is subject to approval from PetroVietnam. 

Regarding the other expenses of VND77bn in Q2 2024, PVT explained that these expenses come from a bareboat contract of NV Trans (a subsidiary of PVT with a 51% stake). In 2023, NV Trans came into agreement to receive one-off income from a strategic shareholder to cover costs and ensure profitability of NV Trans's vessel. However, by Q2 2024, due to on-going negotiation with the strategic shareholder about this term, PVT conservatively reversed this one-off income and recognized it as a one-off expense. Finalization will be made by the end of the year when the contract concludes. While we await the official financial statement to have a fuller review, we foresee insignificant changes to our forecasts.