- We raise our target price (TP) for BSR by 8% to VND29,250/share and upgrade our rating from MARKET PERFORM to BUY following the stock’s 20% share price decline since our previous Update Report. We derive our TP from a 50/50 weighted blend of DCF and P/E multiple valuations (previously 100% DCF), adding the P/E method to better capture BSR’s earnings volatility. Higher DCF reflects (1) our 16% higher aggregate 2026–30F reported NPAT-MI forecast and (2) rolling our valuation horizon to mid-2027, which outweigh (3) a higher WACC of 12.5% (vs 11.8% previously) as we raise our risk-free rate assumption by 1 ppt to 7%.
- Our higher aggregate NPAT-MI is mainly driven by (1) raising the 2026 crack spread 11–25% and 2027 crack spread 25%, reflecting supply disruptions in the Strait of Hormuz and a widening global refined product deficit, and (2) a 1.4% increase in 2026–30F sales volume assumptions.
- We forecast 2026 reported NPAT-MI to surge 3.9x YoY, driven by an 86% YoY increase in BSR’s average crack spreads and a 2% YoY increase in sales volume. 2026F reported NPAT-MI is equivalent to 137% of 2022’s level, mainly due to higher spreads, 16% higher volume vs 2022, and 22% higher inventory at the end of 2025 vs end-2021.
- We forecast 2027 reported NPAT-MI of VND12.0tn (-40% YoY) as crack spreads normalize, together with an 11% YoY decline in sales volume following the scheduled sixth turnaround. The refinery product deficit is projected to narrow to 2.4 mb/d in 2027, but this remains above the pre-pandemic average deficit of approximately 2.2 mb/d, supporting tight market.
- BSR’s valuation looks attractive, with a projected 2027F EV/EBITDA of 4.6x (a ~33% discount vs the ten-year average of select regional peers).
- Catalysts: State’s capital reduction (H1 2027) to ensure 10% free float. Downside risks: Adverse oil price movement pressuring crack spreads and/or triggering inventory provisions.
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