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- We initiate our coverage of PLC with a BUY rating and target price of VND29,050/share (implied TSR of 27.9%, including an expected 4.3% yield). PLC leads Vietnam’s asphalt market with a 30% share, double the capacity of its nearest rival, and has seven strategically placed plants nationwide. It also holds a 6% share in lubricants.
- We forecast PLC to deliver an NPAT CAGR of 85% over the next three years as we believe PLC’s dominance in asphalt, paired with surging public investment disbursements, underpins a multi-year volume upcycle (20% CAGR). We also forecast a 400 bps increase in GPM of asphalt segment. PLC’s revenue has historically strongly correlated with the Ministry of Transportation (MoT)’s disbursement while the MoT targets to disburse VND510tn (USD20bn) in the next five years (60% higher vs the previous five-year period). The Government also aims for 5,000 km of expressways by 2030, implying 2,000 km of new roads from 2025—or an average of 400 km/year. This is one of the most aggressive buildout plans in Vietnam’s history (2-4x higher vs the previous peak cycle).
- We forecast 2025F NPAT to more than double to VND113bn, driven by 22% asphalt revenue growth and GPM rising from 8.5% to 10.5% on our lower Brent price assumption (USD70/bbl in 2025 vs USD81/bbl in 2024).
- PLC’s valuation looks compelling based on a projected 2025F P/E of 16.8x, which implies a PEG of 0.2 given a 3Y EPS CAGR. We also expect a strong recovery in dividend yield to 10% in 2026, given PLC’s healthy balance sheet with no long-term debt and vigorous profit recovery.
- Downside risks: Tougher-than-expected competition from foreign/private players with bitumen imported from the Middle East, forex loss.
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