PVT – Core earnings to maintain stable growth – Update

• 4Q22 net profit (NP) increased by 3.8% yoy to VND206.8bn, making FY22 NP to a record level of VND861bn, fulfilling 105.8% of our forecast.
• We expect PVT’s core earnings to grow at CAGR of 9.7% in FY23-25F thanks to the fleet expansion and high tanker freight rates environment.
• Reiterate ADD at unchanged target price (TP) of VND26,300.

4Q22 earnings grew on solid core business performance
4Q22 revenue increased by 17.2% yoy to VND2,439bn thanks to stronger transportation segment (+25.1% yoy) coming from new tankers contribution (+17% yoy capacity in 2022) as well as higher charter rates. Riding on the rising tanker freight rates globally, PVT renewed charter contracts with higher rates, supporting 4Q22 gross margin (GM) to extend 2.2% pts yoy to 18%. However, 4Q22 NP slightly increased by 3.8% yoy to VND206.8bn due to: (1) 94% yoy increase in interest expense, and (2) 62% yoy rise in G&A expenses.
For the whole FY22, revenue grew 21.3% yoy to VND9,047.5bn and NP rose 30.6% yoy to VND861.2bn on the back of: (1) higher tanker freight rates, (2) the contribution of new acquired tankers (9 tankers/vessels), and (3) abnormal income from tankers liquidation.
Core earnings to maintain stable growth in FY23-25F
Due to actively rejuvenating tanker fleet over the past few years (15 new tankers/vessels in FY21-22), PVT has already gain benefits from the transportation demand recovery after the pandemic, particularly after Russia – Ukraine crisis which triggered the rising tanker rates globally. We believe this will be the pedestal for PVT’s core business to keep growing in coming years with the core earnings CAGR of 9.7% in FY23-25F driven by: (1) the contribution of new acquired tankers (+c.6% CAGR in FY23-25F capacity), and (2) expectedly high tanker rates base as Russia – Ukraine crisis has calibrated the global energy trade flow. For reported earnings, due to lack of abnormal income from tanker liquidation like FY22, we expect PVT’s NP to be flat yoy in FY23F (+0.9% yoy), then achieving a CAGR of 8.4% yoy in FY24-35F.
Reiterate ADD at unchanged TP of VND26,300
We maintain our ADD rating for PVT at unchanged DCF-based TP of VND26,300 due to the mixed impact of: (1) slight adjustments on FY23-25F EPS forecasts, (2) rolling our DCF model to 2023F, and (3) lifting risk free rate from 3% to 4%. Re-rating catalyst is rising tanker freight rates globally. Downside risks come from lower-than-expect tanker freight rates, and higher-than-expected interest rates.

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