# Large Workload to Bolster Profits from 2024-2026
As highlighted in our previous sector report, we believe that Vietnam's oil and gas industry is returning to its "golden era" (similar to 2011-2015) due to sustained high oil prices, which serve as a catalyst for new projects.
Unlocking these oil and gas projects not only brings significant M&C backlog value but also positively impacts other PVS service segments. Consequently, Q1/2024 parent company net profit grew by 40% YoY, despite flat revenue. For Q2/2024, we estimate pretax profit at VND 232 billion (-21% YoY).
2024 is pivotal for PVS as it embarks on key projects like Lô B, Sư Tử Trắng, and Lạc Đà Vàng. Typically, the first year involves surveying, designing, and procuring equipment, with major disbursements and work expected in 2025 and 2026.
We project an 8% CAGR for parent company net profit from 2024 to 2026, compared to 1% for the preceding five years (2019-2023). Currently, PVS trades at a P/E of 22x (it means the market is evaluated the annual net profit growth is at 25%), above the 5-year average of 17x. We believe this price reflects much of the company's growth potential from winning numerous projects. We set a target price of VND 42,400/share, recommending a NEUTRAL rating for this stock.
| Sector | Ticker | Year | WD | CODE | Value (vnd/%) | Growth to Previous |
| DK | PVS | 2023 | Y | Revenue | 19,373,600,000,000 | 18.37% |
| DK | PVS | 2022 | Y | Revenue | 16,366,400,000,000 | 14.77% |
| DK | PVS | 2021 | Y | Revenue | 14,260,000,000,000 | |
| | | | | | |
| DK | PVS | 2023 | Y | Net Profit | 1,060,000,000,000 | 0.89% |
| DK | PVS | 2022 | Y | Net Profit | 1,050,700,000,000 | 39.96% |
| DK | PVS | 2021 | Y | Net Profit | 750,700,000,000 | 5.75% |
| DK | PVS | 2020 | Y | Net Profit | 709,900,000,000 |
## Projected Profit for the Second Half of 2024 Looks Promising
We estimate a 6-month pretax profit of VND 600 billion (+7% YoY) for the first half of 2024, achieving 38% of our projection. For Q2/2024, revenue and pretax profit are estimated at VND 4,490 billion (-5% YoY) and VND 232 billion (-21% YoY), respectively, as the company is still executing projects and hasn't finalized progress payments.
Historically, the company tends to book more profit in the latter half of the year, particularly in Q4. For instance, Q4/2021 saw a significant drop due to a VND 92 billion unusual loss from joint ventures, despite most quarters recording profits over VND 150 billion, mainly due to issues with the FPSO Lam Sơn lease contract. Additionally, in Q4/2023, pretax profit fell by 20% YoY despite a 27% YoY revenue increase, primarily due to a 128% YoY rise in administrative expenses.
In the construction industry, year-end is typically a time for finalizing completed work volumes to process contractor payments and assess business performance for year-end bonuses.
Based on this, and current project information, we estimate H2/2024 profit to grow over 80% YoY. For the full year 2024, we project parent company net profit at VND 1,250 billion (+22% YoY), with corresponding EPS of VND 2,355.