BSR_BUY_TP 34,400 VND_Upside 27%_Keep going up_BSC Company Update

Valuation

BSC recommends BUY BSR shares with a target price of 34.400 VND/SHARE (equivalent to 27% upside compared to the closing price on 01/06/2022 of 27.1 00 VND/SHARE) based on the P/E and FCFF methods.  We are confident in the positive outlook for BSR thanks to (1) Rising oil prices that help crack spreads of BSR products remain high; and (2) Demand for petroleum products recovering when the epidemic is under control.

Forecast of business results

§ BSC forecasts that in 2022, BSR's revenue and NPAT will reach VND 135,279 billion (+34% YoY) and VND 10,071 billion (+51% YoY), EPS FW = VND 3,216  with the assumption (1) The average oil price in 2022 will reach US$100 per barrel (+37% YoY); (2) Product sale volume reached 6.9 million tons (+7% YoY); and (3) The average of consumption price increased by 30% YoY thanks to the positive movement of oil prices and crack spreads.

§ In case the average of consumtion price increases by 40% YoY and BSR completes the provision of VND 1,900 billion, BSC forecasts revenue and NPAT of BSR to reach VND 144,995 billion (+43% YoY) and VND1,981 billion (+80% YoY), respectively, equivalent to EPS fw = 3, 825 VND.

Investment Thesis

§ The crude oil prices & crack spreads increased sharply supporting BSR's profitability.

§ Top market share in the oil refining industry, with regular operating efficiency of over 100%

§ The outlook for increased oil consumption is positive thanks to the controlled epidemic.

Risk

§ The price of crude oil inputs fluctuated sharply.

§ Competition increases when gasoline import tax is gradually reduced to 0% by 2024

Business updates

§ In Q1.2022, BSR's revenue is VND 34,783 billion (+65% YoY), completing 38% of the annual planning, and NPAT is VND 2,312 billion, exceeding 79% of the plan for the whole year of 2022.

§ Q1.2022 business results is positive thanks to the sharp increase in crude oil prices (+39% YoY). BSR's total consumption increased slightly to 1.6 million tonnes (+3% YoY), mainly due to the contribution of Mogas 92 gasoline (+62% YoY), while production of product lines such as Diesel or Morgas 95 decreased slightly.