Result Update Report: PC1 - Cautious with growth expectations ahead
The authorized PDP VIII increases PC1's medium and long-term growth prospects through transmission grid building and renewable energy initiatives. However, we believe that in 2023, the two core segments that contribute the most to PC1's profit structure, namely power construction and power generation, would likely post poorer business results than in the previous year. The year 2023 is also predicted to see contributions from nickel mining and Nomura IP management and operation. We expect the two new projects to make up for the profit gap caused by weaker power construction and power-generating segments, based on a conservative assessment of their contribution to PC1's profit structure.
Using the sum of the parts (SoP) and P/E methods at a ratio of 70/30, we determine the fair value of PC1 stock at VND 28,300/share for a one-year outlook. We believe that the expectation of earnings growth seems priced in. Therefore, with an expected return of -2% based on the closing price of 24/07/2023, we recommend NEUTRAL to PC1.
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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