- We lower our target price (TP) for PVS by 2.0% to VND58,800/share, while reiterating a BUY rating. The lower TP is mainly due to (1) a 1.0-ppt increase in our risk-free rate assumption to 7.0%, outweighing (2) a 1.3% increase in our aggregate 2026–2030F NPAT-MI forecast (changes of +18%/-6%/-2%/-3%/+5% for 2026-30F, respectively).
- The higher aggregate reported NPAT-MI is mainly driven by (1) 18.5% higher 2026-2030 mechanical & construction (M&C) backlog assumption, (2) adding one-off compensation income and a larger guarantee provision reversal in 2026, and (3) a 7% increase in aggregate 2026-2030 net FX gains. These positives outweigh higher SG&A expenses, reflecting H1 2026 cost trends and Circular 99/2025/TT-BTC reclassification.
- We forecast 2026F reported NPAT-MI to rise 20% YoY, driven by (1) 35% YoY higher M&C revenue, and strong net other income. For 2027, we forecast core NPAT-MI to grow 23% YoY, driven by (1) 18% YoY higher M&C revenue; (2) M&C GPM expanding 0.5 ppts YoY, supported by improving offshore wind execution efficiency and a Block B peaking progress, and (3) 36% YoY higher financial income on rising net FX gains as international revenue climbs.
- We project reported/core EPS CAGRs of 15%/26% for 2026-28F, driven by M&C backlog projection of USD7.0bn for 2026-30F and profit from FSO/FPSO JVs increasing from VND729bn in 2026F to VND995bn in 2028F. PVS’s valuation is attractive at a reported 2026 P/E of 9.8x (implied PEG of 0.7) vs its 5-year average P/E of 17.8x.
- Upside potential/catalysts: Winning a USD3bn contract in Qatar (page 18), higher-than-expected reversal of warranty provision (VND4.1tn; end-Q2 2026), 20% stock dividend, HOSE listing.
- Downside risk: Lower-than-expected M&C margin.
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