Update BSR – NEUTRAL

Binh Son Refining and Petrochemical JSC (UPCoM: BSR) 

BSR has announced positive business results for Q2/2024, with a NPAT-MI of VND767 billion (-42.7% YoY), lower than our expectations. Cumulatively, 6M2024 NPAT-MI decreased by 35.2% to VND1,925 billion, completing 167.6% of their full year plan and 34.3% of our full-year forecast.

BSR recorded revenue in Q2/2024 of VND24,429 billion (-27.4% YoY) and NPAT-MI of VND767 billion (-42.7% YoY). This decrease in revenue and profit was due to:

• Sale volume dropped to 1.3 million tons (-28.7% YoY) due to the 5th plant maintenance starting from March 15 to May 1, 2024.
• The trend of average Brent oil price decreasing from USD90.15/barrel in April to USD82.16/barrel in June 2024 reduced the gap between oil price and output selling price (cracking spread) of BSR.
• Gross profit margin decreased to 2.0% from 3.5% in the same period last year. In particular, the gross profit margin of key products such as RON92 and RON95 gasoline was negative by 6.2% and 0.9%, respectively, and was offset by the diesel segment with an 8% gross profit margin.
• Interest income and foreign exchange gain decreased by 27.3% and 6.8% YoY, respectively.

The decrease in NPAT-MI would have been higher if excluding the one-off financial income (VND390 billion) due to the change of control of Central Biofuel JSC (BSR-BF) from a subsidiary to be “an investment in other unit”. With this result, in 6M2024, BSR recorded VND55,117 billion in revenue (-18.6% YoY) and VND1,925 billion in NPAT-MI (-35.2% YoY). The decrease in output and crack spread was the main reason for this development.

Regarding the plan of listing on HoSE, the previous obstacle related to BSR-BF’s overdue debt has been resolved by BSR. Therefore, this plan is highly feasible this year.

For the 2H2024 outlook: since July, the average crack spread has dropped. This development is also quite suitable as: (1) BSR is facing increased competition from imported petroleum products (import tax reduced to 0% this year from 5% last year) and (2) oil prices are also under pressure from poor manufacturing activities in the US and China + prospects of increased crude oil production from OPEC and the US.

Quick comment: we forecast 2024 business results with revenue reaching VND125,540 billion (-14.8% YoY) and NPAT-MI of VND5,608 billion (-34.1% YoY). However, for 2025F, we project that revenue and profit will recover by 7% YoY and 23% YoY, respectively, from the low base of 2024, reaching VND134,284 billion and VND6,913 billion, respectively Our target price for BSR by the end of 2025 is VND23,800/share, equivalent to a total profit margin of 2.5%.