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- PVS released its Q2 2024 results with revenue of VND5.6tn (+18% YoY) and reported NPAT-MI of VND195bn (-13% YoY). The divergence in the growth rate of revenue and earnings is due to (1) negative GPM of the mechanical & construction (M&C) segment which we attribute to management’s conservative approach in cost estimates, and (2) 33% higher YoY general & administrative expenses (due to a 33% higher YoY labor cost and a 38% higher YoY others & outsourcing cost), and (3) financial expenses increasing 103% YoY.
- In H1 2024, revenue was VND9.3tn (+10% YoY) and reported NPAT-MI was VND495bn (+13% YoY). The strong bottom line is mainly due to 26% YoY higher income from floating oil storage joint ventures (FSO/FPSO JVs). Additionally, there was a 0.6 ppts YoY increase in the blended GPM, driven by an improvement in the GPM of the seismic survey/supply base/O&M segments by 28.6/4.1/2.9 ppts YoY, respectively, partly offset for seasonally weak mechanical & construction revenue booking (completing only 22% of our 2024 forecast).
- H1 2024 results are roughly in line with our expectations, completing 32% and 41% of our 2024 respective full-year revenue and reported NPAT-MI forecasts. We note because of the nature of M&C business revenue, profit is usually booked in Q4.
- We also note that as a result of our anticipation of delayed groundbreaking for Block B to late 2024, there is a slight downside risk to our 2024 earnings forecast for PVS, pending a fuller review. However, we currently foresee slight potential upside to our long-term earnings forecast due to (1) potential FSO leasing contracts for the Yellow Camel and Block B projects, and (2) potential contract extensions for FSO Ruby II and FPSO Lam Son.
Figure 1: PVS’s H1 2024 results
VND bn | Q2 2023 | Q2 2024 | YoY | H1 2023 | H1 2024 | YoY | % of Vietcap’s 2024F |
Revenue | 4,712 | 5,578 | 18% | 8,416 | 9,287 | 10% | 32% |
Gross profit | 187 | 231 | 23% | 391 | 489 | 25% | 28% |
Sales & marketing exp | -17 | -20 | 21% | -37 | -42 | 16% | 37% |
General admin (GA) exp | -232 | -308 | 33% | -402 | -513 | 28% | 53% |
Operating profit (EBIT) | -62 | -98 | N.M | -48 | -66 | N.M | N.M |
Net financial income | 157 | 140 | -11% | 304 | 291 | -4% | 60% |
Net financial expense | -15 | -30 | 103% | -66 | -44 | -33% | 24% |
Income from FSO/FPSO JVs | 177 | 223 | 26% | 334 | 420 | 26% | 58% |
Net other income/loss | 35 | 45 | 31% | 34 | 48 | 40% | N.M |
Profit before tax (PBT) | 291 | 281 | -4% | 558 | 648 | 16% | 39% |
NPAT | 235 | 208 | -12% | 463 | 513 | 11% | 39% |
Reported NPAT-MI | 224 | 195 | -13% | 439 | 495 | 13% | 41% |
Recurring NPAT-MI (*) | 224 | 195 | -13% | 437 | 495 | 13% | 41% |
Source: PVS, Vietcap. Note: (*) Recurring NPAT-MI excludes the impact of provision expenses for the technical issue at FSO MV12 and provision expenses for risk of contract termination of FPSO Lam Son. We treat expenses/profits from M&C warranty provisions/reversal (booked in other profit) as a recurring item, as this is a recurring activity for any contractor.
Figure 2: PVS’ revenue, gross profit, and gross margin breakdown in H1 2024
VND bn | Q2 2023 | Q2 2024 | YoY | H1 2023 | H1 2024 | YoY | % of Vietcap’s 2024F |
Revenue | 4,712 | 5,578 | 18% | 8,416 | 9,287 | 10% | 32% |
Offshore support vessels | 390 | 632 | 62% | 726 | 1,054 | 45% | 64% |
FPSO/FSO management services | 523 | 563 | 8% | 970 | 1,111 | 14% | 49% |
Seismic survey and ROV | 42 | 121 | 190% | 67 | 226 | 235% | 41% |
Supply base | 366 | 307 | -16% | 662 | 642 | -3% | 42% |
Mechanics & construction | 2,835 | 2,600 | -8% | 4,966 | 4,403 | -11% | 22% |
Operation & maintenance | 361 | 593 | 64% | 745 | 990 | 33% | 45% |
Others | 196 | 763 | 290% | 279 | 863 | 210% | 82% |
Gross profit | 187 | 231 | 23% | 391 | 489 | 25% | 28% |
Offshore support vessels | 44 | 56 | 27% | 83 | 103 | 25% | 52% |
FPSO/FSO management services | 24 | 24 | 0% | 59 | 46 | -22% | 26% |
Seismic survey and ROV | 7 | 38 | 421% | -4 | 51 | N.M | 103% |
Supply base | 64 | 60 | -5% | 119 | 141 | 19% | 40% |
Mechanics & construction | 28 | -28 | -198% | 100 | 24 | -76% | 4% |
Operation & maintenance | 20 | 36 | 83% | 30 | 69 | 129% | 33% |
Others | 0 | 44 | 141x | 5 | 55 | 968% | 105% |
|
|
| Δ ppts |
|
| Δ ppts |
|
Gross profit margin % | 4.0% | 4.1% | 0.2 | 4.6% | 5.3% | 0.6 |
|
Offshore support vessels | 11.3% | 8.8% | -2.4 | 11.4% | 9.8% | -1.6 |
|
FPSO/FSO management services | 4.6% | 4.3% | -0.3 | 6.1% | 4.1% | -1.9 |
|
Seismic survey and ROV | 17.6% | 31.7% | 14.1 | -6.1% | 22.5% | 28.6 |
|
Supply base | 17.4% | 19.7% | 2.3 | 17.9% | 22.0% | 4.1 |
|
Mechanics & construction | 1.0% | -1.1% | N.M | 2.0% | 0.6% | -1.5 |
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Operation & maintenance | 5.4% | 6.1% | 0.6 | 4.1% | 7.0% | 2.9 |
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Others | 0.2% | 5.8% | 5.6 | 1.8% | 6.4% | 4.5 |
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Source: PVS, Vietcap
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