PVD Update – Outperform

PetroVietnam Drilling and Well Service Corp. (PVD VN) 

PVD has announced positive business results for Q3/2023, with a NPAT-MI of VND150.5 billion (compared to a loss of VND33.7 billion YoY and -6.7% QoQ), in line with our expectations. accumulated 9M2023, NPAT-MI reached VND381 billion (compared to a loss of VND150 billion in 9M2022), fulfilling 381% of PVD’s annual plan and 67% of our full-year projection.

In Q3/2023, PVD recorded a revenue of VND1,381 billion (+11.2% YoY) and a NPAT-MI of VND150.5 billion, compared to a loss of VND33.7 billion in Q3/2022. This results attributed to the following factors: 

1. The increase of jack-up rig day rates by 33.8% YoY to 79,000 USD/day significantly contributed to this result. This development was attributed to the prolonged high crude oil price, which have stimulated demand for oil exploration and production activities. 
2. Additionally, in Q3/2023, PVD continued to record the remaining one-off profit of VND70 billion from the termination agreement of a drilling contract for PVD I rig with the client Valeura Thailand.
3. The well technical services segment also showed good recovery with a 12.4% YoY increase in revenue and a gross profit margin rising to 28% from 24.5% in the same period last year.

These factors overshadowed the negative impact from 52% YoY increase in financial expenses, mainly stemming from foreign exchange loss of VND71.8 billion (+74.7% YoY).

With these results, PVD’s 9M2023 revenue reached VND4,033 billion (+2.8% YoY) and a NPAT-MI of VND381 billion (compared to a loss of VND150 billion in 9M2022), achieving 73% and 67% of our adjusted full-year projection, respectively.

Quick comment: For 2023, we have adjusted our projected NPAT-MI to increase by 10% compared to the previous projection, reaching VND571 billion (compared to a loss of VND103 billion in 2022). The main reason for this adjustment is the higher increase in jack-up rig day rates for new contracts. Looking towards 2024, with the continuous increase in rig day rates, we project that PVD will achieve a revenue of VND6,440 billion (+17.2% YoY) and NPAT-MI of VND896 billion (+56.9% YoY). Using the discounted cash flow (DCF) method, our target price for PVD by the end of 2024 is VND32,000 per share, equivalent to a total return rate of 14.2%. Rating Outperform.