Investment Recommendation

PVS_BUY_TP 18,300_Upside 17.3%_April showers bring May flowers_BSC Company update

Date

22/07/2021
Security code

PVS
Company

Petroleum Technical Services
Language

Tiếng Anh
Number of Downloads

284

Detailed report

Valuation

We recommend BUY for PVS stock with a target price of VND 18,300, +17.3% from the November 17, price of VND 15,600 based on P/E 2021 = 10.5

Forecast of business performance

2020, BSC forecasts that PVS's revenue and net profit will be VND 17,881 billion (+5.4% YoY)and VND 778 billion (-3.7% YoY), respectively, FW 2020 EPS = VND 1,498/share (-15.7% YoY). Assumptions (1) 2020 average oil price = 41 USD/barrel (-36% YoY) and (2) Construction & Engineering segment improves gross margin = 5%.
In 2021, BSC forecasts PVS revenue and NPAT will reach VND 18,619 billion (+4.1% YoY) and VND 903 billion (+16% YoY), respectively, FW EPS 2021 = VND 1,738/share (+16.0% YoY). Assumptions (1) Average oil price 2021 = 45 USD/barrel (+9.8% YoY) and (2) PVS executes big projects.

Investment thesis

Investment to large oil and gas projects are heavily focused, which is expected to bring growth to VPS

Catalyst

The market will receive new cash flows from investment funds according to the MSCI FM Index and MSCI FM 100 Index from November 2020 when Kuwait is upgraded. Accordingly, the proportion of PVS shares in iShare fund is expected to increase from 0.09% to 0.22% (equivalent to a purchase value of 0.49 million USD). (For details refer to Link)

Financial result & business update

In 9M2020, PVS recorded revenue = 14,725 billion VND (+8.5% YoY) NPAT = 635 billion VND (-0.5% YoY), completing 98% of revenue plan and 99% of 2020 profit plan, mainly thanks to accounting for account receivables.
Large gas field projects such as Ca Voi Xanh and Block B – O Mon continue to be behind schedule because of difficulties in negotiation and finance