PVS – The stock price is reflecting a lot of expectations from the Block B project
- PVS announced 1Q2023 results with revenue of VND 3,705 bn and NPATMI of VND 214 bn. Although gross margin increased, G&A expenses were higher and there were no other profits, making the bottom line almost flat compared to the same period last year.
- PVS has been awarded lot of EPC contracts for offshore wind power segment. Recently, the company has announced new contract for the design, manufacturing, and commissioning of offshore substations for the Baltica 2 with an estimated value of USD180 mn. Previously, PVS announced 33 suction bucket jacket (SBJ) foundations contract with a value of more than USD300 mn.
- Not only EPC offshore wind contract, the market is expecting huge Block B backlog for PVS and the share price has increased strongly recently, reflecting the this high expectation. However, the project also missed the FID deadline so many times before. the Golden Camel project (the package value is smaller than Block B) is also another potential project that can contribute to the backlog for PVS. However, PVS is bidding for many large projects and has limited construction capacity. Therefore, the company must also consider the potential projects to add to its backlog.
- Despite consecutively winning many recent projects, the falling point of PVS's profit will be in 2024 with the NPATMI of VND 1,026 bn (+29.2%), equivalent to P/E 2024 of 17.1x. In case of winning Block B, CAGR of net profit will be 14.5% and P/E seems to be attractive. But excluding this project, 2024-2026 P/E is fair. With the conservative view, we have not count the Block B in our forecast and recommend NEUTRAL to PVS at the current market price.
Petrovietnam Technical Services Corp. Petrovietnam Technical Services Corporation (PTSC) is a Vietnam-based provider of oil and gas related services and equipment industry. The Company provides petroleum storage services and marine transportation services using sea-borne tankers and specialized vessels. It is also involved in the provision of engineering services, geophysical surveying and mapping services and ship repair services. Moreover, it manufactures and installs tanks and gas pipelines. The Company also offers marine port services and offshore facility management and maintenance services. Other operations include the trading of petroleum and other petrochemicals. As of December 31, 2012, the Company was a subsidiary of Vietnam National Oil and Gas Group (Petrovietnam), and it had 13 subsidiaries, three joint ventures, five affiliates, along with six branches.
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