GAS_BUY_TP 109,400_Upside 22.3_Positive in the long term_BSC company update

Valuation  

§  We continue to maintain our BUY recommendation with a 2022 target price of VND109,400/share (+21% from the closing price on September 6, 2021), equivalent to a target P/E of 18x .

Forecast of business results

§  BSC forecasts that GAS's revenue and NPATMI in 2021 will reach VND 74,989 billion (+17% yoy) and VND 9,682 billion (+23% yoy), EPS FW = VND 5,059/share with the assumption: (1 ) Sao Vang - Dai Nguyet field adds 1.5 billion  m³ of gas/year (+16% of output), (2) Su Tu Trang field in Phase 2A has an output of 200 million  m³ of gas, and (3) average oil price in 2021 reached 68 USD/barrel (+36% yoy).

§  BSC forecasts that GAS's revenue and NPAT in 2022 will reach VND 87,312 billion (+16% yoy) and VND 11,635 billion (+20% yoy), EPS FW = VND 6,079/share with the assumption (1) Average oil price average in 2022 is 72 USD/barrel (+7% yoy); (2) Su Tu Trang Field Phase 2A, with an output of 500 million m3 of gas; and (3) the LPG segment maintains an output of 2.1 million tons.

Investment Thesis

§  Oil price in 2021 remains around 70 USD/barrel, helping to improve GAS's profit.

§  Su Tu Trang gas field, phase 2A, will come into operation from June 2021, adding about 500 million  m³ of gas to GAS's annual output..

§  The LNG segment is the long-term growth driver, helping GAS to be re-evaluated.

Risks

§  Upstream incidents that cause unplanned reductions/stops of gas supply at blocks/fields

§  Key gas field projects are behind schedule.

Company Update

§  In 6M2021, GAS recorded a revenue of VND 40,272 billion (23% yoy) thanks to the significant increase in fuel oil (+80% yoy) and LPG (+72% yoy) prices in Q2. However, profit from Financial activities decreased by 55% yoy, along with SG&A expenses increased by 46%, making NPAT only VND 4,359 billion (+4% yoy).

§  LNG Thi Vai project was built on schedule, expected to be completed in Q4/2022.