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Vietnam

PetroViet Nam Transportation: Q2 21 update – Stable growth

  • Q2 21 results: Improvement in gross margin thanks to transport segment

  • H2 21 outlook: Fleet expansion and one-off profit

  • We recommend Accumulate with a target price of VND24,570 per share

Vu Tran
Vu Tran

Oil & Gas, Fertilizers

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Rong Viet
24 September 2021
Published byRong Viet

Q2 21 results: Improvement in gross margin thanks to transport segment

  • Q2 21 sales increased by 3.1% yoy to VND1,873bn (US$83.2mn). Excluding commercial sales, Q2 21 revenue decreased by 1.4% yoy to VND1,638bn (US$72.8mn). The transportation segment recorded VND1,356bn (US$60.24mn) in revenue, up 1.6% yoy while FSO/FPSO's revenue was VND195bn (US$8.6mn), down 11.3% yoy.

  • Q2 21 gross margin improved to 17.3% from 14.3% (in Q2 20), driven by the transportation segment. Gross profit surged 44.6% to VND363bn (US$16.1mn).

  • Lower financial income in Q2 21, compared to last year due to lower interest income and gain from FX.

  • NPATMI posted VND213bn (US$9.4mn, +9.7% yoy) in Q2 21. 6M NPATMI was VND349 (US$15.5mn, +33.7% yoy, fulfilling 86% of the full year guidance.

H2 21 outlook: Fleet expansion and one-off profit

PVT's Q3 business will be negatively affected by the low capacity of BSR. In details, crude oil fleets will handle 10 shipments, compared to the normal 18 shipments as PVT Hera was on dock in July and BSR is likely to run about 80-90% of its capacity. On the contrary, we expect FSO Dai Hung Queen will apply a higher rate from Q3 21 with oil price above US$50/barrel. In addition, PVT will book VND10bn (US$0.4mn) from liquidating PVT Jupiter in Q3 21.

In Q4, there will be an improvement in business thanks to investment in new fleets and abnormal profit. After buying two chemical tankers, one bulk shipping and one VLGC, PVT will continue to expand its fleet with 3-4 chemical tankers. Besides, PVT plans to liquidate Athena in Q4, adding VND150bn (US$6.7mn) to its 2021 PBT.

Based on these assumptions, we project H2 21 revenue and NPAT to be VND3,808 (US$169.2mn) and VND402bn (US$17.8mn). For FY 21, revenue and net profit for the parent company is expected to be VND7,407bn (US$329.2mn, +0.3% yoy) and VND751bn (US$33.4mn, +12.2% yoy), respectively.

Valuation and recommendation

Despite difficulties from BSR, PVT is forecast to keep growing in 2021 thanks to its fleet expansion strategy and one-off profit. We believe that PVT can maintain this momentum in the next few years. However, the stock price has been rising recently, making it less attractive at this level. With the expected return of 12.6% (including cash dividend of VND1,000), compared to the closing price on 24 September 2021, we recommend Accumulate with a target price of VND24,570 per share.