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PVT – Earnings growth driven by new fleet – Update

Company Note 17/05/2022    38

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  • 1Q22 net profit (NP) rose 11.8% yoy to VND152.5bn thanks to the contribution of newly-acquired tankers, fulfilling only 18.2% our forecast.
  • We expect PVT to keep rejuvenating its fleet in 2022, becoming the key driver for PVT to attain a net profit CAGR of 13% in FY22-24F.
  • Reiterate ADD with a lower target price (TP) of VND26,300.

Market Price

Target Price

Dividend Yield

Rating

Sector

VND17,700

VND26,300

5.65%

ADD

INDUSTRIALS

1Q22 performance supported by newly-acquired tankers/vessels

1Q22 net revenue grew 17.8% yoy to VND2,022bn, mostly driven by transportation segment, which is driven by: (1) newly-acquired tankers in 2021, and (2) O&G transportation demand recovery. However, 1Q22 blended GPM retreated 0.6% pts yoy to 14.4% as higher fuel cost negatively affected tankers operating in spot market. 1Q22 NP grew only 11.8% yoy to VND152.5bn due to the absence of one-off gain.

Keep expanding tanker fleet in 2022, but adjourn for VLCC investment

After investing 5 new tanker/vessel in 2021, PVT has announced the purchase of 2 new oil/chemical tanker in 1Q22, continuing its rejuvenating fleet plan. We expect PVT to purchase 5 new tankers/vessels in 2022 with a total capex of over VND1,900bn, including 3 oil/chemical tankers, 1 dry bulk vessel and 1 Aframax (crude oil tanker), translating to 13% higher in its fleet capacity. However, the VLCC (Very Large Crude Carrier) tanker investment plan is expected to continue delaying due to under-capacity operation of Nghi Son refinery. Hence, we expect PVT to be back to VLCC investment plan in 2023 once Nghi Son could run at its maximum capacity.

We forecast a net profit CAGR of 13% in FY22-24F

We lower our FY22-24F EPS forecasts by 2.8%/8.3%/3.6% mainly as we consider effects of the delay in VLCC investment and low-capacity operation of Nghi Son refinery, which negatively impact on the highest profitable segment of PVT (crude oil transportation). However, PVT’s earnings growth remains positive in FY22-24F with a net profit CAGR of 13%, supported by: (1) the contribution of new tankers/vessels, (2) O&G transportation demand rebound on the high oil price environment and the pandemic to be under control, and (3) the tanker liquidation plan in 2022.

Reiterate ADD with a lower TP of VND26,300

We reiterate our ADD rating for PVT with a lower TP of VND26,300 due to our changes in FY22-24F EPS forecasts. Our TP is still based on DCF valuation and target FY22-23F P/E of 10.4x, weighted equally. Re-rating catalysts are higher transportation volumes and non-recurring income from tanker liquidation. Downside risks are lower-than-expected transportation volumes/charter rates.

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