Buy recommendation for PVD stock
Vietcap Securities Company (VCSC) has revised down the target price of PetroVietnam Drilling and Well Services Corporation (PVD) by 14% to VND26,600/share but continues to maintain an Outperform recommendation as PVD's share price has declined by 16% over the past 3 months. VCSC's reduction in the target price reflects our 21% reduction in our 2024-2028 reported profit after tax (PAT) forecast (-17%/-24%/-22%/-22%/-22% for 2024/2025/2026/2027/2028, respectively) and the positive impact of VCSC updating the target price to the end of 2025.
VCSC reduces NPAT forecast after reporting minority interest due to PVD's average daily rig rate expected to decline by 8% over 2025-2028 due to our assumption of lower Brent oil prices as stated in VCSC's Oil & Gas Industry Update Report dated 14/11, and a 13% increase in cash operating expenses based on the company's 9M24 business results.
VCSC forecasts 2025 NPAT after core/reported MI to increase by 26%/45% YoY, respectively, driven by an expected 2% YoY increase in average jack-up (JU) day rates, an expected 25% YoY growth in well-related revenue, and VCSC’s expectation that the USD/VND exchange rate will stop increasing in 2025. VCSC forecasts increased exploration and production activities in 2025, which will boost well-related services, associates’ profits, and day rates in the increasingly tight Southeast Asian JU market, although VCSC believes that the recovery in day rates will be slightly slower than expected.
Buy recommendation for POW stock
According to KB Securities Vietnam (KBSV), in the third quarter of 2024, PetroVietnam Power Corporation (POW - HOSE) recorded revenue and profit after tax of VND 6,061 billion (up 6.7% over the same period) and VND 453 billion (up 765%), respectively, mainly from financial revenue of VND 411 billion of unrealized exchange rate gains. Regarding the core business segment, Vung Ang coal-fired power stopped production to serve renovation activities, leading to a 41% decrease in coal-fired power output.
In Q3/2024, POW's gas-fired power output reached 2,041 million kWh, a positive growth compared to the low base level of Q3/2023. However, the 30% decrease in output compared to the previous quarter shows increased competitive pressure from the hydropower group, which is expected to continue to affect NT2's output until the end of 2024. The expected output in 2024 is 8,637 million kWh.
As of the fourth quarter of 2024, the problems of Nhon Trach 3&4 gas-fired power plants related to negotiations on power purchase contracts, gas purchase contracts and land lease handover procedures have all been resolved satisfactorily. KBSV estimates that the revenue and gas-fired power output for the whole year will reach VND25,126 billion and 11,309 million kWh, with the base assumption for the electricity price being VND2,436/kWh.
Based on SOTP and EV/EBITDA valuation, business outlook as well as considering possible risks, KBSV recommends buying POW shares, target price is VND 14,500/share.
► Stock market commentary December 13: VN-Index remains in an uptrend
Source: https://vov.vn/thi-truong/chung-khoan/mot-so-co-phieu-can-quan-tam-ngay-1312-post1141706.vov
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