- We lower our target price (TP) for PVD by 17% to VND21,100/share but upgrade our rating from MARKET PERFORM to OUTPERFORM, as PVD’s share price has declined 23% over the past three months. Our lower TP is mainly due to a 30% reduction in our aggregate 2025-2029F NPAT-MI forecast (with respective cuts of 31%/39%/36%/23%/25% for 2025-2029F), which outweighs the positive impact of rolling our TP horizon forward to mid-2026.

- Our lower aggregate NPAT-MI forecast due to (1) a 9.8% cut in PVD’s average day rate (2025–29F) following weaker-than-expected audited 2024 results (see our Oil & Gas Sector Update, April 25, 2025), and softer regional rates, (2) a 1.9 ppts reduction in well-related services’ GPM, and (3) a lower 2025 utilization rate of 88% (from 96%) as the PVD VI rig was overhauled in Q1.

- We forecast 2025F recurring NPAT-MI to decline slightly by 3% YoY, driven by (1) an 8 ppts drop in PVD’s average jack-up utilization rate due to PVD VI undergoing overhaul in Q1, which outweighs (2) our assumption of a 2% YoY increase in the average jack-up day rate, (3) a 3% YoY increase in well-related services’ gross profit, and (4) a 2.5x YoY jump in JV’s shared profits.

- We forecast a 3-year NPAT CAGR of 28% given slight increase in day rate, contribution from PVDVIII jackup rig from late 2025, continued recovery of well-related services, and JV's shared profit.

- PVD’s valuation looks undemanding at an average 2025/26F P/E of 14.1x (three-year PEG of 0.5 based on our projected 2024-2027F reported EPS CAGR of 28%); and 2025F P/B of 0.6x.

- Upside potential: Investment of one more jack-up rig (PVD9) with a JV partner.

- Downside risks: FX loss on USD-denominated debt; lower-than expected utilization rate.

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