PC1 – Growth outlook seems priced in
- Q1/2023, PC1 recorded net revenue and NPAT-MI of VND 1,505 bn (+2% YoY) and VND 14.7 bn (-89% YoY), respectively. Despite the new contributions from nickel project and Nomura IP, the low profit is reflected in (1) lower earnings contribution from hydropower plants, whose output plummeted by 59% YoY, and (2) higher interest expenses, which totaled VND 202 bn (+81% YoY).
- In 2023, we expect net revenue and NPAT-MI to be VND 8,942 bn (+7.0% YoY) and VND 505 bn (+9.8% YoY), respectively. The earnings contribution from the Nickel project and IP real estate is expected to compensate for the power construction and hydropower segments. Although not exposed to exchange rate losses as in 2022, interest charges will continue to put pressure on the company’s earnings as PC1 extends its scale in both short-term and long-term debts.
- We raise our one-year target price to VND28,900/share (up 10% from VND26,000/share) when (1) adding IP real estate to valuation and (2) setting a new target P/E for the period between mid-2023 and mid-2024. Currently, we believe that the growth outlook seems priced in. As a result, we rate PC1 NEUTRAL with a 4% upside based on the closing price on Jun 22nd, 2023.
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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