PetroVietnam Tech Services (PVS VN)
Potential Block B beneficiary
Long-term catalysts emerge; U/G to BUY
Renewable energy (RE) is shaping up to be a key strategic business for PVS after it clinched its first large EPC contract for a Taiwan offshore windfarm. This should also help its ESG credentials. PVS also stands to benefit from the reform of Vietnam’s O&G regulations and the block B Omon project catalyst in the long term. We U/G the stock to BUY with a TP of VND26,500 based on 1.1x P/B (2021-22 average). While a substantial earnings recovery is unlikely in 2023, the sector (and PVS’s) long-term prospects are set to radically improve in coming years.
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PetroVietnam Gas (GAS VN)
4Q22E still positive
Despite weaker oil prices in 4Q22, we expect GAS to post 12% YoY earnings growth for the quarter, driven by higher volumes as gas-fired electricity consumption recovered from last year’s low base. Its LNG terminals and Block B pipeline will secure supply growth in the long term. Maintain BUY with an unchanged TP of VND133,000.
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Vietnam Oil & Gas
Counting on a new cycle
Bullish on upstream
We expect Vietnam’s sustained period of low E&P spending cycle is approaching the end of its downcycle amid the clearing of policy
bottlenecks and a large project about to kick off. Vietnam is highly motivated to boost its upstream industry as the country’s crude production and reserves have been declining sharply. We expect the share prices of PVD and PVS to rerate as these upstream service providers are best placed to benefit from the sector’s innovation. We see potential for an earnings turnaround from next year while the Block B Omon project will fuel growth from 2024 onward.
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The Board of Directors (the “Board”) of Golden Agri-Resources Ltd ($0.255, unchanged) wishes to inform shareholders and potential investors of the Company that, based on a preliminary review of the financial information currently available to the Company and its subsidiaries (the “Group”), the Group is expected to record a loss from changes in fair value of its financial assets in the profit and loss Statement of approximately USD230 million for the fourth quarter ending 31 December 2022 (“4Q2022”) as a result of changes in the fair value of its investments in 4Q2022.
At its last traded price of 25.5 cents, Golden Agri is capitalized at $3.23 billion and trades at 3x PE, 0.5x book value and 6% dividend yield.
Consensus profit forecast of US$760 million for full year ending Dec’22 will have to be revised lower by US$230 million to US$530 million and thus consensus 12 months target price of 32 cents will correspondingly will have to be revised lower as a result.
Hyphens Pharma ($0.35, up 0.5 cents) is pleased to announce that its subsidiary, Hyphens Pharma Pte. Ltd., has entered into exclusive license and supply agreements with Cassiopea S.p.A., a subsidiary of Cosmo Pharmaceuticals N.V. (SIX: COPN, XETRA: C43) (“Cosmo”) for the exclusive rights to develop and commercialize Winlevi® (clascoterone) cream 1% and all future product extension and/or improvement in the treatment of acne in 10 countries across Southeast Asia.
Consensus target price stands at S$0.40, representing 14.3% upside from current share price. Pending updates from management, we
believe there should be meaningful upgrades in consensus earnings forecasts as well as target price. While we do not currently have a rating on Hyphens Pharma, we would be putting the company on our radar/watch-list for follow ups in term of potential coverage (either non-rated or rated).