PC1 - 2024 core NPAT slightly trails forecast; power construction GPM doubles QoQ

*2024: Revenue was VND10.1tn (USD397mn, +31% YoY, 96% of our full-year forecast), with reported NPAT-MI of VND460bn (USD18mn, 13x YoY, 88% of our full-year forecast).

- Revenue grew across major segments, including in (1) power construction and steel poles, (2) the nickel business (2.7x YoY), driven by estimated 1.9x YoY higher raw nickel sales volume, and (3) higher hydropower output due to more favorable weather conditions.

- Reported/core NPAT-MI surged 13x/6x YoY from low bases, due to (1) 1.8-ppts blended GPM expansion (driven by significant improvement in the nickel business by 15.3-ppts to 32.5%, possibly due to potentially more efficient operations and higher volume, while ASP declined YoY, and (2) YoY stronger hydropower.

- Reported/core NPAT-MI trailed our forecasts with 88%/93% completion rates due to (1) higher-than-expected G&A expenses and (2) lower-than-expected income from JVs following underperforming land sales from the Yen Phong 2A IP, (3) a higher-than-expected FX loss, and (4) lower-than-expected GPM of the power construction segment.

*Q4 2024: Revenue was VND2,540bn (USD100mn, -1% YoY), NPAT-MI was VND60bn (USD2.4mn, +81% YoY), and core NPAT-MI was VND146bn, 4.5x YoY.

- Blended GPM expanded YoY notably by 8.0 ppts to 23.3%, driven by (1) strong margin recovery from power construction to 8.5% (also x2 QoQ, after a low level in Q3 due to transmission line 3’s tight deadline), and (2) 53.7% GPM from nickel vs losses in Q4 2023. These together outweighed FX losses of VND108bn vs none in Q4 2023.

* We see slight downside risk to our 2025F core NPAT-MI (VND878bn, USD35mn, +49% YoY) due to slightly lower-than-expected GPM recovery of power construction (averaged 7% in 2024 vs our forecast of 7.4%) and higher-than-expected SG&A expenses, pending a fuller review. We currently have a BUY rating for PC1 with a target price of VND31,200/share.

*Note: PC1 released its Q4 2024 financial statements, including retrospective adjustments to Q4 2023 and year-end 2023 figures for its nickel mining business. These adjustments account for VAT, discrepancies between actual and estimated nickel revenue, and the environmental resource tax as stated in its H1 audited report. Consequently, we revise the Q4 2023 and 2023 results in our analysis.

PC1’s 2024 results

VND bn	Q4 2023	Q4 2024	YoY	2023	2024	YoY	% of Vietcap’s 2024F
Revenue	2,554	2,540	-1%	7,694	10,078	31%	96%
Power construction*	1,126	1,230	9%	2,607	3,686	41%	97%
Electric steel pole manufacturing	421	227	-46%	1,166	1,456	25%	91%
Power generation	414	510	23%	1,461	1,706	17%	103%
Real estate	133	13	-90%	187	39	-79%	142%
Nickel (57% stake)	84	270	223%	624	1,701	173%	93%
Nomura (70% stake)	140	156	12%	614	599	-2%	97%
Others	235	135	-43%	1,034	890	-14%	87%
Gross profit	392	593	51%	1,448	2,083	44%	96%
Power construction*	64	87	36%	235	258	10%	92%
Electric steel pole manufacturing	45	32	-29%	117	144	23%	99%
Power generation	223	317	42%	736	948	29%	97%
Real estate	53	7	-88%	79	21	-74%	112%
Nickel (57% stake)	-21	118	N.M.	107	553	415%	100%
Nomura (70% stake)	22	31	43%	139	149	7%	97%
Others	7	2	-72%	34	11	-68%	34%
SG&A expense	-136	-211	56%	-391	-567	45%	106%
Operating income	257	382	49%	1,057	1,516	43%	93%
Financial income	46	63	36%	183	186	2%	162%
Financial expense	-202	-294	-109%	-967	-929	-4%	102%
In which: Interest expense	-209	-182	40%	-848	-749	-12%	93%
In which: FX loss & others	0	-108	N.M.	-119	-159	34%	149%
Income from JVs	4	-5	N.M.	2	46	2785%	43%
Other income	-4	15	N.M.	-18	11	N.M.	N.M.
PBT	100	161	61%	256	829	224%	89%
NPAT before MI	89	124	40%	182	704	287%	89%
Minority interest	-56	-64	16%	-145	-243	67%	93%
Reported NPAT-MI	33	60	81%	36	460	1169%	88%
NPAT-MI (core)**	33	146	342%	100	588	489%	93%

Source: PC1, Vietcap (* Power-related construction segment includes grid erection & installing activities and EPC contracts for renewable energy projects. Others mainly include low-margin machinery trading; ** Excluding one-off gains and unrealized FX losses)