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Vietnam

PetroVietnam Drilling & Well Services: Q4 19 results update and 2020 forecast

    Vu Tran
    Vu Tran

    Oil & Gas, Fertilizers

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    Rong Viet
    13 February 2020
    Published byRong Viet

    PVD announced Q4 19 results with sales of VND1,389bn, down 1.2% yoy as trading activity slumped. Drilling services was up and well service remained stable.

    Key highlights: 

    • Trading revenue was down 78.8% yoy as there were no new projects, compared to the same period last year. However, with profit contribution not so significant, the fluctuation in sales did not affect the business.
    • Drilling service posted VND791bn in revenue, up 60% thanks to (1) contribution from hired jack up rigs of cVND157bn; (2) PVD’s fleets operated longer and got a higher rig day rates than in Q4 18. PVD’s jack up rigs operation day and rig day rates were 6.6% yoy and 20% yoy higher respectively than in the last quarter.
    • Well service was stable with VND513bn in revenue.
    • Gross margin in Q4 19 was not as high as Q4 18 because of the extension in the depreciation period of Jack Up rigs in Q4 18. This helped the company not to incur any depreciation. As a result, the Q4 19 gross margin was 10.4% versus 22.2% in Q4 18. Gross profit came to VND144bn, down 54% yoy. Excluding the impact of depreciation in Q4 18, the Q4 19 gross margin is forecast to increase by 12.2%.
    • PVD also reverted VND51bn from the Technology and Science Fund as well as VND45bn from the provision of PVEP.
    • In Q4 19, PVD reported VND139bn in PBT (down 68.3% yoy) and VND140bn in NPATMI (down 63.7% yoy).
    • For 2019, PVD posted VND4.369bn in revenue, down 20.5% yoy and VND189bn in NPATMI, down 4.4% yoy.

    2020 forecast:

    In 2020, all of PVD’s fleets are secured with full-year contracts on an average rig day rate of US$65,000 (10% higher than the 2019 level). PVD should post a profit from its core business. We expect that PVD can collect VND100bn from PVEP, which means that there will be VND100bn to be added to 2020 earnings. We forecast that PVD will post VND 6,080bn and VND 317bn in sales and NPATMI, respectively. We have a Buy recommendation on PVD.