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PVD Update – OUTPERFORM
06/11/2024 - 3:26:55 CHPetroVietnam Drilling and Well Service Corp. (PVD VN)
PVD recorded Q3/2024 business results with profit after tax reaching VND180 billion (+35.2% YoY and +38.5% QoQ), lower than our expectations. Cumulatively, 9M2024 NPAT increased by 34% to VND461 billion, completing 121% of its annual plan and 52% of our initial forecast. We have revised our 2024 NPAT forecast down by 19% compared to the previous update, primarily due to gross profit margin in the service segment and lower profits from joint ventures. With rig day rate remaining high, we forecast 2025 NPAT to reach VND 805 billion (+13.2% YoY). Recommendation OUTPERFORM with a target price of VND30,200/share by the end of 2025.
PVD reported revenue in Q3/2024 of VND2,438 billion (+76.5% YoY) and NPAT of VND 180 billion (+35.2% YoY). This growth was driven by the following factors:
Revenue from drilling services increased by 71% YoY due to: (1) additional contribution from two leased rigs Hakuryu-11 and BORR-THOR while there was none in the same period, (2) the average jack-up rig day rate is estimated to increase by 16% YoY.
Revenue from well technical services increased by 41% YoY thanks to the recovery of exploration and exploitation activities in the region.
Profit after tax growth would have been even higher if excluding the extraordinary profit of VND 70 billion in Q3/2023.
With this result, in 9M2024, PVD recorded revenue of VND 6,480 billion (+60.6% YoY) and NPAT of VND 461 billion (+34% YoY). The increase in rig rental prices (+16% YoY) and the additional contribution from the two leased rigs were key drivers of this performance. These factors helped offset the decline in profits from joint ventures (-53% YoY) along with no extraordinary profits recorded (compared to VND 140 billion recognized in the same period last year).
We revise our 2024 net profit forecast down 19% YoY to VND710bn (+31.5% yoy) due to lower gross profit margin from service segment and profit from joint ventures. Looking forward to 2025, with rig rental prices remaining high, we forecast NPAT at VND805bn (+13.2% YoY). Using the DCF method, we value PVD at a target price of VND30,200/share by the end of 2025.
