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PVT – Sailing through the rough water ─ Update

Company Note 25/02/2021    165

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  • PVT’s FY20 revenue eased 3.9% yoy to VND7,458bn and net profit declined 11% yoy to VND614bn, but still above our expectations.
  • We raise FY21-23F EPS by 22.7%-24.8% to reflect a brighter outlook as PVT targets to restart its fleet expansion plan in 2021.
  • Reiterate ADD with a higher TP of VND19,800.

Market Price

Target Price

Dividend Yield

Rating

Sector

VND 17.100

VND 19.800

2.95%

ADD

INDUSTRIALS

Strong 4Q20 NP growth driven by non-core activities

PVT’s 4Q20 net revenue increased 14.2% yoy to VND2,208bn and net profit rose significantly 32.3% yoy to VND262.5bn, thanks to (1) VND36.3bn of other income from vessel storage fees, (2) the reversal of provision expenses made earlier in the year and (3) a 92% yoy growth in 4Q20 financial income to VND129.1bn partially as PVT delayed its capital disbursement plan.

FY20 results beat our expectations

For FY20, PVT reported a 3.9% yoy decrease in FY20 revenue to VND7,458bn, beating our expectations by 19%. Meanwhile, FY20 net profit declined 11% yoy to VND613.5bn as PVT reduced charter rates to support its partners in 2020. However, net profit still exceeded our forecast by 19.2% on the back of higherthan-expected transportation volumes (LPG and refined oil products) andfinancial income

Healthier balance sheet provides fuel for the rejuvenating fleet plan

As PVT delayed vessel acquisition plan in 2020 due to Covid-19, cash and equivalent balance increased 24% yoy to VND3,332bn at end-2020, accounting for nearly 72% of PVT’s current assets. Besides, the company also actively paid off debts with total debt declining 24% yoy to VND2,602bn, pushing D/E ratio to a healthy 0.42x by end-20. We expect PVT to disburse over VND4,700bn of capex in FY21-23F to acquire 7 new vessels, which could translate to a gross profit CAGR of 8.5% in the transportation segment.

We forecast net profit CAGR of 6.9% in FY21-23F

The bottom line growth is projected to be driven by (1) the recovery of charter rates from 2H21F amid higher oil price, and (2) improved GPM of the crude oil segment by 4.7% pts from FY20 to 20.9% in FY22F thanks to the acquisition of a new VLCC in 2H21F.

Reiterate Add with a higher TP of VND19,800

We reiterate our Add rating with a higher TP of VND19,800 on 22.7%-24.8% upward revision in FY21-23F EPS given stronger-than-expected FY20 results. Our TP is based on DCF valuation and target FY21-23F P/E of 9.1x, weighted equally. Potential re-rating catalysts include higher-than-expected refined oil and LPG transport volumes. Downside risks are the declines in oil prices/charter rates.

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