PLX – Bottom lines hit by the outbreak in 3Q21 – Earnings update

• PLX posted a 91.1% yoy drop in 3Q21 net profit (NP) to VND76bn due to stricter nationwide movement control during the outbreak in Jul – Sep.
• However, 9M21 NP surged 60 times yoy from 9M20 low base to VND2,235bn, fulfilling 65.4% of our full-year forecast.
• We expect a stronger 4Q21F thanks to the recovery in domestic petroleum consumption when the Government ease movement restrictions.

3Q21 earnings was hit hard due to Delta variant outbreak
• PLX’s 3Q21 net revenue increased by 26.1% yoy to VND34,625bn thanks to the impact of higher average selling price which outweighed the 23% yoy decrease in domestic petroleum sales volume. However, 3Q21 gross profit dropped 35% yoy due to the negative effects of lower sales volume, leading to a 5.5% pts yoy retreat in 3Q21 gross margin (GPM). We mention that PLX’s GPM usually moves in the opposite direction to fuel prices as the company just earns the fixed profit implied in the price structure.
• 3Q21 affiliates income declined 52% yoy to VND73bn mainly due to the lower contribution of Castrol BP Petco. Meanwhile, 3Q21 financial income rose 32.8% yoy to VND263bn thanks to higher deposit and FX gain.
• As a result, PLX’s 3Q21 net profit greatly slumped 91.1% yoy to VND76bn.

Positive outlook remains intact
• PLX’s 9M21 net revenue grew 29.2% yoy to VND119,741bn while 9M21 net profit jumped 60 times yoy from 9M20 low base to VND2,235bn on the back of higher fuel prices. This bottom line was in line with our expectations at 65.4% of our FY21F full-year forecast.
• We expect stronger 4Q21F and FY22F ahead thanks to Vietnam’s community mobility and manufacturing activities recovery from 4Q21F onwards as the Government has eased social distancing. Notably, PLX’s total inventories to increase by 41% yoy and 25% YTD at end-3Q21 amid the fuel prices upward trend could also help the company improve its GPM in the next quarter.
• We forecast PLX’s NP to grow 245.8%/27.7% yoy in FY21-22F.

Investment risks
• Re-rating catalysts include higher-than-expect petroleum sales volume and the divestment from PG Bank deal.
• Downside risk comes from the prolonged Covid-19 pandemic which could hurt the demand for petroleum products.

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