PC1 Flash News – BUY

PC1 GROUP JSC (HoSE: PC1)

PC1 reported +0.5% YoY in revenue to VND2,232 bn in Q3/2024, accompanied by +156.4% YoY in NPAT to VND259 bn. Cumulative 9M2024, NPAT reached VND578 bn, +263.5% YoY, completing 110% 2024 company’s plan and 128% our forecast. The positive performance was primarily driven by: (1) a reduction in finance costs, particularly interest expenses, due to lower interest rates; (2) reversed foreign exchange loss; and (3) growth in the energy and mining segments. We maintain our target price for PC1 at VND32,800/share, implying a total expected return of 22.3%, rating BUY.

Q3/2024 revenue +0.5% YoY, driven primarily by growth in the construction, retail, and energy segments, while others experienced declines. The construction and retail recorded the highest growth rates, at 47.5% and 21.6% YoY, reaching VND705 bn and VND169 bn, respectively.  Gross margin contracted to 19,8%.

However, while Q3/2024 NPAT +156.4% YoY, thanks mostly to a decrease in finance expenses.  In details, finance expenses was down to VND98 bn, -69.8% YoY. In which, interest expenses was VND183 bn, -14.9% YoY, reversed foreign exchange to net gain VND86 bn (Q3/2023: loss of VND94 bn).  Therefore, if excluding these accounts, PC1 would recorded VND173 NPAT in Q3/2024, -10,8% YoY (Q3/2023: VND194 bn)

For 9M2024, revenue reached VND7,538 bn, +45.0% YoY. Gross profit was VND1,490 bn, +32.6% YoY, with gross margin of 19.8% compared to 21.6% in 9M2023. NPAT reached VND578 bn, +263.5% YoY, driven by a -17.0% YoY in finance expenses to VND635 bn, with interest expenses -10.8% YoY to VND567 bn.

Quick conclusion: By Q3/2024, PC1 exceeded its 2024 NPAT target by 10% and surpassed our forecast by 28%. However, we believe that there is currently no compelling reason to adjust our forecast due to potential risks to the Q4/2024 outlook. These risks include the possibility of reversed exchange rate, which could result in foreign exchange losses for the company. Additionally, the slow disbursement for power infrastructure poses potential risks as well. Our target price for PC1 remains at VND 32,800/share, representing a total expected return of 22.3%.