PVT_General Corporation of Petroleum Transportation_BSC_Company Update_EN

Valuation
We expect PVT will record EPS of around 1,820 VND/share, corresponding to PE fw = 10.08x. On 5/3/2018, PVT was traded at 18,350 VND/share. This is fairly close to the price we have recommended in the recent update. With the outlook of 2018, we recommend to HOLD PVT.
In long term, we estimate that PVT has plenty rooms for growth which comes from demand from Nghi Son refining and plans to reduce PVN's ownership to below 51% (expected in 2019).

Catalyst
When the refinery goes into operation, it will help boosting the quantity of crude oil shipments. However, according to the update, PVT only can carry crude oil for Nghi Son from Q3/2018.

Investment highlights
(1) In 2018, crude oil output will grow sharply from around 6.06 million tonnes in 2017 to about 7.2 million tonnes as Dung Quat refinery has completed regular major repairs and CDU capacity of the plant can operate at 109% capacity (the capacity before maintenance is only about 102-103%). (2) Nghi Son refinery has been put into commercial operation. However, we think that the profit from this plant in 2018 is not large because PVT plans to rent ships for service, the gross profit is not high. (3) FSO / FPSO continues to be a stable source of revenue for PVT. Thanks to the autonomy of personnel operations, gross profit margin of PVT is expected to increase slightly in 2018