PLX – Positive prospect thanks to stable domestic fuel market – Update

• 4Q22 net profit (NP) surged 93.4% to VND1,168bn thanks to the increase in normative costs calculated petroleum base prices..
• We believe in a strong bounce back of PLX from FY23F with a NP CAGR of 48.2% in FY23-24F thanks to: (1) the re-stablisation of domestic market, and (2) Vietnam’s petroleum demand to keep growing.
• Reiterate ADD at unchanged target price (TP) of VND45,600..

Strong recovery in 4Q22 thanks to normative cost adjustments
4Q22 revenue grew 59.1% yoy to VND78,383bn on the rise in both total petroleum sales volume (+c.22.6% yoy) and average selling price (+c.30% yoy). Notably, 4Q22 gross profit significantly increased by 44.5% yoy (and 53% qoq) thanks to: (1) the increase in normative costs calculated fuel base price from Oct and Nov 2022, and (2) a inventories revaluation reversal of VND357bn. In the meantime, 4Q22 net financial income jumped over 11 times yoy, partially offset to 38.7% yoy increase in selling expense. As a results, PLX recorded an impressive recovery in 4Q22 with a NP of VND1,168bn (+93.4% yoy), accounting for 79% of full-year earnings. For a whole FY22, revenue surged 79.9% yoy to the record VND304,080bn, but NP slid 47.9% yoy to VND1,480bn.
Brighter outlook for PLX from FY23F onwards
After an unprecedented FY22, we expect PLX’s profit per liter to recover to pre-Covid level from FY23F, coming from: (1) the re-stablization of domestic supply as Nghi Son refinery stably operates, helping PLX reduce its import source proportion with high transportation costs, and (2) the authority’s on-time and adequate petroleum trading surcharges adjustments. These will bring PLX’s gross profit per liter to pre-Covid level with a growth rate of 19%/4% yoy in FY23-24F, in our estimates. Besides, we expect PLX’s total sale volume to keep growing incoming years with a CAGR of 4.9% in FY23-25F. Overall, we see a brighter prospect for PLX in coming years with a NP growth rate of 149.6%/18.7% yoy in FY23-24F.
Divestment from PGBank to be a short-term catalyst for PLX
Recently, PLX’s board of directors has approved the PGBank divestment plan. According to the plan, PLX will put up 120 million PGBank shares (40% of total stake) for auction on HOSE on 7 April 2023 with a initial bidding price of VND21,300/share, equivalent to the minimum size deal of VND2,556bn. We estimate PLX to recognise at least VND700bn of financial one-off gain once the deal was successful. This is also a potential upside catalyst for PLX stock price in short-term.
Reiterate ADD at unchanged TP of VND45,600
We maintain our ADD rating for PLX at unchanged DCF-based TP of VND45,600 on the back of: (1) FY23-25F EPS forecasts revision, and (2) rolling our DCF model to 2023F. Upside catalyst comes from the extradionary income from PGBank divestment. Downside risks are higher-than-expected petroleum trading costs and FX fluctuations risks
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