OIL - Further positive development for petroleum sector regulations

We attended OIL’s analyst meeting on April 18, 2025. Below are the key takeaways:

1. Developments of the new decree proposal: Shifting toward market-determined pricing.

Under current regulations, base prices are determined using a formula that includes: (1) average input sourcing costs estimated by the Government, (2) a regulated operating cost estimated by the Government, and (3) a regulated operating profit of VND300/liter. In the August 2024 draft, the decree proposed allowing distributors to set their own prices so long as they remain under a Government-set ceiling price.
But now, according to OIL, the latest draft petroleum business decree (based on the opinion of the Government’s Standing Committee on April 13 and under final review by the Ministry of Industry and Trade) introduces significant changes, most notably a shift toward market-based pricing mechanisms. The proposed revision removes the regulated profit and ceiling price. The State will now only publish a price formula, international reference price, premium, and regulated operating cost. Each distributor will calculate and declare their own retail prices based on actual input sourcing costs and others.
According to OIL, this is a positive and more market-determined shift. Since each petroleum distributors has different sourcing costs, the change would favor reputable players with larger retail networks like PLX and OIL.
Our view: This version of the decree is more favorable than we had previously assumed under the August 2024 draft, pending a fuller review.

2. 2025 Guidance

Petroleum sales volume: 5.4 million tonnes (–4% YoY vs 2024A; +8% vs 2024G). Retail sales contribution is expected to rise to 27% (2024: 25.8%).
Revenue: VND97.5tn (-22% YoY vs 2024A; +17% vs 2024G).
Reported NPAT: VND624bn (+32% vs 2024A; +30% vs 2024G).
Petroleum station expansion: Targeting 69-72 new or renovated petrol stations in 2025 (+8.5% YoY). In 2024, OIL added 95 stations, bringing the total to 838 (+12.7% YoY).

3. Preliminary Q1 2025 results

Sales volume: 1.3 million tonnes (-4% YoY; 24% its 2025G).
Revenue: VND32.6tn (+9% YoY; 33% its 2025G).
PBT: Reported a loss of VND6bn (vs a profit of VND299bn in Q1/2024) due to the recent plunge in the price of oil.
Petroleum station expansion: Added 29 new petrol stations in Q1 (42% of the 2025 plan), bringing the total to 866 stations (+3.3% vs end-2024; +9.8% YoY).

4. Dividend payment

5. Stricter oversight of petroleum distributors

According to OIL, five petroleum distributors had their licenses revoked in 2024, reducing the total number of licensed distributors to 27 (excluding aviation fuel providers). OIL currently holds a 23% share of the domestic market.
The Government is tightening oversight of petroleum distribution. If this trend continues, it could create a more favorable situation for reputable players like PLX and OIL. The Government has previously discussed consolidating the market to around 10 key distributors. For reference, Thailand has only seven and Japan just five major distributors, both still operate distribution effectively.

6. Impact of US reciprocal tariffs and oil prices

OIL believes the impact of US reciprocal tariffs on the petroleum sector is indirect—mainly through slower economic growth, which could soften petroleum demand. In addition, falling oil prices may increase inventory risks.

7. Jet A1 outlook

OIL received its license on January 10, 2025, to become a distributor of Jet A1 fuel. The company is finalizing required procedures and expects to launch operations by Q4 2025, with commercial sales starting in Q1–Q2/2026.
OIL targets a total Jet A1 volume of 2 million tonnes over the first five years (400,000 tonnes/year) and aims to capture a 10% market share initially.

8. HOSE listing plan

OIL is processing the bankruptcy for Phu Tho Biofuel Plant to eliminate its qualified audit opinion (a key step for its HOSE listing). The company is currently issuing its third notice to investors. If no resolution follows, it will proceed with the legal bankruptcy process. Management expects this to be completed by 2026.
In its 2025 AGM materials, OIL disclosed that the investment in Phu Tho Biofuel JSC is unlikely to be recovered. As a result, the company plans to book a provision of VND247bn (equivalent to 40% of its 2025 NPAT guidance).