PVT – FY22-23F outlook remains positive – Update

• 3Q21 net profit (NP) declined 13% yoy to VND94.3bn due to the pandemic outbreak leading to the decrease in oil & gas transportation demand.
• We see the company positive prospect in the next two years following the actively fleet rejuvenation and the recovery in O&G transportation demand.
• Reiterate Add with a higher target price of VND28,200 following 3.8%/4.7% FY22-23F earnings upgrade and the higher FY22-23F target P/E.

Lackluster results due to stricter movement control in 3Q21

PVT reported a 9.5% yoy decrease in 3Q21 revenue to VND1,680bn on the back of: (1) the drop in trading & services segment (-49.2% yoy), and (2) lower domestic oil & gas products transportation demand due to the strict social distancing methods which hampered the domestic mobility in 3Q21. However, 3Q21 blended gross margin (GPM) still improved 1.4% pts mainly thanks to a 10% pts expansion in FSO/FPSO GPM with higher day rate. Additionally, 3Q21 net financial expenses tripled to VND13.2bn as PVT actively disbursed capital for its fleet expansion. As a result, 3Q21 net profit slid 13% yoy to VND94.3bn.

For 9M21, the bottom line grew 32.6% yoy to VND468.4bn thanks to the recovery in charter rates and the contributions of new tankers, accounting for 61.6% of our full-year forecasts.

Positive prospect in FY22-23F following the fleet rejuvenation

On 17 September, PVT continued to announce a new purchase of oil/chemical tanker – Shamrock Jupiter (19,837 DWT), showing the company effort in fleet rejuvenation after delaying due to Covid-19 in 2020. Overall, PVT has added 5 new tankers/vessels into its fleet, including 3 oil/chemical tankers, 1 LPG vessel (VLGC) and 1 bulk carrier vessel in 9M21. Following that, we believe the company operational efficiency to be improved thanks to the contributions of new and modern tankers. Moreover, we expect the transportation demand to recover in coming times, particularly in domestic market when social mobility bounces back after the pandemic, dragging to the increase in transportation demand of PVT’s key customers like Dung Quat and Nghi Son refineries. Hence, we forecast PVT’s NP to grow 9.6%/14.2%/11.8% yoy in FY21-23F.

Reiterate Add with a higher target price (TP) of VND28,200

We reiterate our Add rating with a higher TP of VND28,200 on the back of the upgrades in FY22-23F EPS forecast by 3.8%/4.7% and higher FY22-23F target P/E from 9.4x to 10.4x due to the recent re-rating of the market with higher liquidity and supports from increase in oil prices. Potential re-rating catalysts are higher transportation volumes and non-recurring income from tanker liquidation. Downside risk comes from lower-than-expected oil price as it could hamper the transportation demand and charter rate recovery.

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