PC1 – 2024 should mark a year of earnings turnaround
- For Q4/2023, we expect PC1's NPAT-MI to be VND 196 bn (+192.9% QoQ, -0.6% YoY), with the following assumptions: (1) positive performance in the electricity and construction sectors in Q4/2023, although still lower than Q4/2022; (2) nickel mining contributing an additional 11,000 tons of ore exports in December 2023; (3) continued contributions from Nomura IP; (4) the residential RE segment, with commercial retail space sales on par with Q3/2023 (while not recording any in Q4/2023); (5) no additional forex losses, as seen in Q3/2023. Correspondingly, for FY23, we expect PC1's net revenue and NPAT-MI to reach VND 7,639 bn (-8.6% YoY) and VND 252 bn (-45.2% YoY), resulting in an EPS of VND 759/share.
- For FY24, we expect PC1's NPAT-MI to experience robust growth compared to the low base of 2023. We forecast that the company's net revenue and NPAT-MI will reach VND 9,227 bn (+20.8% YoY) and VND 496 bn (+96.8% YoY), respectively, resulting in an EPS of 1,558 VND/share. Our assumptions include (1) increased activity in construction and EPC contracting in 2024; (2) a recovery in the power generation sector, primarily hydropower; (3) the mineral segment contributing approximately 40,000 tons of ore exports when operational for the entire year; (4) additional contributions from the industrial RE sector, particularly from Yen Phong 2A IP; and (5) lower FX losses compared to 2023.
- We have a one-year target price for PC1 at VND 27,200 per share, based on two methods: the sum of the parts (SoTP) and P/E, with respective weights of 70% and 30%. Despite the positive business outlook for 2024, we believe that the growth prospects are currently priced in. Therefore, we recommend that investors consider accumulating shares when the market undergoes a significant correction at a reasonable price. Currently, with a 0% upside based on the closing price as of December 7th, 2023, we recommend a NEUTRAL rating on PC1 stock
Power Construction Joint Stock Company No 1 (PCC 1) is a Vietnam-based company primarily engaged in power transmission structures construction. Its leading business activities include the construction of electric power transmission lines, towers, and hydro power generation plants; the manufacture of galvanized structural steels; the mining of iron ores, and the wholesale of construction materials. The Company, via its subsidiaries, is also involved in the development of residential and commercial properties, the manufacture of motorized vehicles, as well as the operation of storage and warehousing facilitites.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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