PVT – Core business is getting stronger – Update

• 2Q22 revenue increased by 19.6% yoy to VND2,265bn, but 2Q22 net profit (NP) declined 11.8% yoy to VND212.8bn due to higher financial expenses.
• We expect PVT to achieve a NP CAGR of 13% in FY22-24F thanks to: (1) contribution of new tankers, and (2) O&G transportation demand rebound.
• Reiterate ADD at unchanged target price (TP) of VND26,300.

2Q22 net profit (NP) declined mainly due to abnormal financial expenses
2Q22 revenue grew 19.6% yoy to VN2,265bn thanks to strong growth of its core business – transportation (+30.7% yoy), driven by: (1) higher tanker rates following Russia – Ukraine crisis, and (2) contribution from new acquired tankers. However, 2Q22 blended GM retreated 0.7% pts yoy to 19.5% due to trading & services segment. Besides, PVT posed 2Q22 net financial expenses of VND31.5bn compared to 1Q22 net financial income of VND26bn as: (1) PVT increased debt (+19% ytd) to finance its fleet rejuvenating plan, and (2) PVT recorded FX loss of VND18bn (+9 times yoy). As a result, PVT posted a 11.8% yoy decline to VND212.8bn in 2Q22 NP.
For 1H22, revenue increased by 18.7% to VND4,287bn, in which transportation segment rose 27% yoy, accounting for 76% of total revenue (the highest level over the past 5 years). Meanwhile, 1H22 NP slightly decreased by 3.3% yoy to VND365.4bn mainly due to abnormal financial expenses, still be in line with our expectations at 44.9% of our FY22F forecast.
Bright prospect in the next couple of years
As global oil producers are likely to raise output amidst the current high price environment, O&G transportation demand should stronger rebound, benefiting for a O&G transporter like PVT. Thus, we believe in brighter outlook for PVT from 2H22F as many time charter contracts could be renewed with higher rates. Furthermore, Dung Quat refinery operating at full-capacity will ensure transportation volume for PVT in domestic market. Notably, one-off income of c.VND100bn from the tanker liquidation plan in 2H22 should also support for PVT’s earnings to grow 23.4% yoy in 2022F. Overall, we forecast PVT to attain a NP CAGR of 13% in FY22-24F, supported by: (1) the contribution of new tankers/vessels, and (2) O&G transportation demand rebound, potentially leading to stronger tanker rates in coming times.
Reiterate ADD at unchanged TP of VND26,300
We reiterate our ADD rating for PVT with a TP of VND26,300, based on DCF valuation and target FY22-23F P/E of 10.4x, weighted equally. Re-rating catalysts include higher tanker rates and non-recurring income from tanker liquidation. Downside risks are lower-than-expected transportation volumes and the decline in oil price which could affect market sentiment on share price.

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