GAS – Riding on global energy price hike – Update

• 1Q22 net profit (NP) rose 68.9% yoy to VND3,429bn, fulfilling 29.8% of our full-year forecast.
• The current coal supply shortage is likely to open opportunities for gas-generated electricity mobilization in some months ahead.
• Reiterate ADD at unchanged target price (TP) of VND143,100.

Strong 1Q22 earnings thanks to higher oil prices
1Q22 net revenue grew 51.9% yoy to VND26,689bn on the combination of the global energy prices spike and a 19% yoy increase in LPG sales volume to c.563,000 tonnes, while dry gas sales volume was flat yoy at c.2.0 cbm. In the period, blended GPM ameliorated 0.6% pts to 19.2% thanks to higher contribution of dry gas segment compared to 1Q21. On the other hand, 1Q22 net financial income declined 23.1% yoy to VND159bn as GAS increased its debt (+2 times yoy) to finance its major infrastructure projects. At the bottom line, GAS posted a 68.9% yoy increase in 1Q22 NP to VND3,429bn, coming in at 29.8% of our FY22F forecast.
Benefiting from coal supply shortage in near term
According to EVN, total inputs to EVN’ coal-fired power plants just met 76.8% of the plan in 1Q22, leading to lower-than-expected utilization rate from late-1Q22. We consider these plants to face the supply shortage in near term as they are difficult in seeking alternative sources (imported sources) due to the high coal price environment caused by Ukraine crisis. Hence, we believe gas-based electricity to be the feasible power source to offset to coal-fired power thanks to the domestic supply autonomy, benefiting for GAS in the next couple of months. Overall, we expect FY22F GAS’s dry gas volume to increase by 26.6% yoy, playing a main role in a FY22F NP growth rate of 32.7% yoy.
We expect FY22F earnings to beat company’s business plan
GAS targets an overly cautious plan for 2022 with revenue of VND80,044bn (+1.3% yoy) and NP of VND6,929bn (-20.0% yoy). We highlight that the guidance is based on the Brent oil price assumption of US$60/bbl and 1Q22 results has fulfilled 49.5% of this plan. For 2022F, we forecast GAS’s NP of VND11,513bn (+32.7% yoy), 66% above GAS’s plan thanks to higher oil price assumption and dry gas sales volume recovery. According to 2022 AGM, LNG Thi Vai terminal will come online in 4Q22F, and GAS expect to start importing LNG in late-2022 or early-2023, depending on global market situation. Besides, GAS plans to pay cash dividend of VND2,500/share for FY22F.
Reiterate ADD with unchanged TP of VND143,100
We reiterate our ADD rating at unchanged TP of VND143,100, based on an equal weighting of DCF valuation and the target FY22-24F P/E of 22.3x. Re-rating catalyst is higher oil price. Downside risks include the decline in oil price and lower-than-expected dry gas sales volume.

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