PVS - H1 2026 NPAT grows 37% YoY, core NPAT broadly in line with our expectations - Earnings Flash

• We see insignificant changes to our 2026 core NPAT-MI forecast, pending a fuller review. H1 reported NPAT-MI completes 51% of our full-year forecast and exceeded our expectations, mainly due to VND459bn of compensation income (above our VND100bn projection). Core NPAT-MI completes 31% of our full-year forecast. However, we attribute this to PVS’s conservative approach to project-progress recognition in H1 and expect stronger core earnings in H2 as Block B execution accelerates and M&C revenue recognition picks up toward year-end. 
• In H1, the M&C segment was broadly in line with our expectation with revenue completing 35% of our 2026F forecast, gross profit completing 46% of our 2026F forecast, and average GPM of 6.6% (vs our forecast of an average of 5% for the full year). In addition, PVS has not yet recognized any guarantee provision reversal (guided at VND635bn vs our forecast of VND150bn) in H1, which potentially offset for higher-than-expected SG&A expenses. 
• Near-term opportunities with oil & gas projects in the Middle East and Golden Sea Lion might provide upside to our 2027 earnings forecast. Meanwhile, a substantial workload from Blue Whale, PVN’s offshore wind project, offshore wind power export to Singapore, and nuclear power are upside catalysts for our 2028-2030 earnings forecast. CEO stated that Golden Sea Lion oil project might reach FID in 2027, one year sooner than our expectation. The CEO’s comments support our assumption for a USD500mn contract from this oil field.
• For H1 2026, PVS posted revenue of VND17.3tn (+29% YoY) and reported NPAT-MI of VND941bn (+37% YoY). We estimate core NPAT-MI at VND582bn (-32% YoY). The Core NPAT-MI decline was mainly due to (1) a 29% YoY decline in net financial income, reflecting lower FX gains, and (2) a 23% YoY decline in FSO/FPSO JV income. These factors outweighed an EBIT turnaround to VND148bn (from a loss of VND114bn in H1 2025). The EBIT improvement was mainly supported by: (1) 19% YoY growth in M&C revenue, driven by continued execution of major projects; (2) 39% YoY lower selling expenses, mainly reflecting lower short-term warranty provisioning. Reported earnings were supported by VND456bn of net other income (vs VND3bn in H1 2025), which we attribute to compensation for the cancellation of a 35-jacket/foundation EPC contract under the Formosa offshore wind power project in Taiwan (this amount was also significantly higher than our previous estimate of VND100bn).
• In Q2 2026, PVS reported revenue of VND8.6tn (+17% YoY) and reported NPAT-MI of VND525bn (+48% YoY). We estimate core NPAT-MI at VND164bn (-70% YoY). While reported earnings were lifted by the VND460bn compensation income, Q2 EBIT and core NPAT-MI softened as: (1) M&C revenue declined 4% YoY, which we believe reflected PVS's conservative approach to project-progress recognition early in the year before larger recognition toward year-end; (2) G&A expenses increased 33% YoY, mainly due to higher personnel costs related to employee protection and repatriation from the Middle East; (3) net financial income fell 17% YoY on lower FX gains despite higher interest income from larger cash balances; and (4) FSO/FPSO JV income declined 20% YoY, mainly due to lower contributions following last year's FSO Yellow Camel construction. We also note that total warranty provisions increased by VND104bn QoQ during Q2, including VND59bn added to long-term provisions and VND45bn to short-term provisions.
• We note that PVS made several accounting reclassifications under Circular 99/2025/TT-BTC, which took effect on January 1, 2026. Most notably, short-term construction warranty provisions are now recorded under selling expenses rather than COGS. As a result, some costs previously recognized within the M&C segment’s COGS   have shifted to SG&A expenses. Therefore, we believe EBIT provides a more comprehensive view of the M&C segment’s underlying performance than gross profit.

Figure 1: PVS’s Q2 & H1 2026 results

Source: PVS, Vietcap. Note: (*) Core NPAT-MI excludes the impact of provision expenses for the technical issue at FSO MV12 and provision expenses for risk of contract termination of FPSO Lam Son. We treat expenses/profits from M&C warranty provisions/reversal (booked in other profit) as a core item, as this is a core activity for any contractor. We also excludes the impact of forex losses.

Figure 2: PVS’s revenue, gross profit, and gross margin breakdown in Q2 & H1 2026

Source: PVS, Vietcap

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