• We attended PVS’s analyst meeting on May 16, 2025. Overall, PVS set conservative 2025 guidance with revenue to decline 5% YoY and PBT down 36% YoY. However, management shared their confidence in achieving 25% YoY revenue growth, citing strong Q1 results and ongoing project execution. Despite potential oil price volatility and uncertainties under President Trump’s economic policies, management shared that they remain resilient with a substantial USD3bn M&C backlog for the Block B and offshore wind projects that ensure a steady workload through at least the end of 2028. The CEO also expects ~USD500mn of newly-signed contracts for the overseas offshore wind power segment p.a. from Asia and Europe. Additionally, PVS’s growth beyond 2030 includes: new workload from Vietnam’s nuclear power project as well as windfarm projects to export electricity to Singapore and Malaysia. 
• Our view: We see insignicant changes to our 2025 earnings forecast as we already forecast a further provision of VND250bn for land lease expenses fpr Sao Mai Ben Dinh port, a 51%-stake subsidiary. For the longer term, we see slight downside risk to our M&C margin forecast due to: 1) potentially slightly-lower-than-expected M&C margin due to 57% higher-than-expected capex; 2) slightly-lower-than-expected day rate/revenue of FSO Block B. We currently have a BUY rating for PVS.

1. 2025 Guidance. PVS guides for 2025 revenue of VND22.5tn (+45% vs 2024G; -5% vs 2024A; 64% of our 2025F forecast) and PBT of VND1.0tn (+17% vs 2024G; -36% vs 2024A; 78% of our 2025F forecast). Management remains confident in exceeding these targets, citing strong Q1 2025 revenue of VND6tn (+62% YoY) despite seasonally low activity. They are aiming for 25% full-year revenue YoY, which implies VND30tn in revenue (equivalent to 85% of our 2025F forecast). Historically, PVS has outperformed its guidance, with actual revenue and profit exceeding targets by an average of 55% and 85%, respectively, over 2022–2024.

2. Share capital increasing via stock dividend, in line with our forecast: PVS plans to increase its share capital by 7% via a stock dividend at a 100:7 ratio for 2024 earnings (vs the VND700/share cash dividend proposed at the 2024 AGM; our projection assumes no cash dividend). After the increase, PVS’s share capital will be VND5,144bn.

3. PVS remains a defensive play amid oil price volatility and potential policy risks from President Trump’s administration. The company remains confident in its secured backlog, which should support a steady workload through at least 2028. 

• US reciprocal tariffs have minimal impact given PVS has no direct exposure to the US market. PVS remains confident in its secured backlog, which should support a steady workload through at least 2028. 
• In the overseas offshore wind market, PVS believes offshore wind remains a long-term, irreversible trend, despite President Trump's pro-fossil fuel stance. However, near-term project delays are possible. For example, two offshore wind tenders in California and another in Europe where PVS was a bidder, have been suspended. Still, PVS targets to secure up to USD500mn in offshore wind contracts annually, implying USD2.5bn during 2026-2030, which is higher than our current forecast of USD1bn for the 2026-2030 period. 
• On the domestic front, we see risk as we currently project PVS to secure USD1bn in Vietnam offshore wind contracts by 2030, but foresee that the timeline may slip by one-two years. 
• Net-net, potential upside from stronger-than-expected overseas projects could offset any delays in domestic project execution.

4. Accounting policy of the M&C margin is broadly in line with our expectation but higher-than-expected capex might put some further slight pressure on margins: PVS plans to continue expensing rather than depreciate the fixed assets for expanding facilities until 2027. PVS expects the margin of offshore wind power to be similar to oil & gas. Additionally, PVS raised its 2026-2030 capex guidance to VND15.5tn (up 57% from the VND9.8tn plan disclosed at the 2024 AGM). The updated allocation includes VND6.8tn for M&C infrastructure, VND3.3tn for supply base expansion, VND4.8tn for vessel investments, and VND0.6tn for other categories. 

5. PVS secured a contract to provide the FSO for the Block B project. The company will seek shareholder approval at the upcoming AGM on May 29, 2025. The project will be executed through PTSC South East Asia Pte. Ltd., a joint venture between PVS (51%) and Yinson (49%). PVS shared that the FSO Block B is similar in scale to FSO Bien Dong, with a storage capacity of 350,000 barrels. The lease term includes a fixed 14-year period, extendable by an additional 9 years. The estimated contract value (excluding VAT) exceeds USD480mn for the first 14 years (equivalent to 94% of our 14-year revenue projection for this FSO). PVS expects the FSO construction to be completed by Q4 2027. PVS targets the project to deliver an ROE of over 10%. We project an IRR of 14% and forecast this FSO will contribute VND79bn to PVS’s NPAT-MI during 2025–2029F (accounting for 4.9% of PVS’s reported NPAT-MI over the same period). 

6. Introducing new long-term growth pillars: Nuclear Power and CCUS. 

• Nuclear power services: In line with the Vietnam Government’s energy vision, the Prime Minister has designated PetroVietnam (PVN) as one of the two key investors in the country's first nuclear power projects. As a PVN subsidiary, PVS target to contribute at least 50% of the localized nuclear service solutions. This represents a major new business line and capitalizes on the group’s integrated capabilities.
• Oil & Gas and LNG services: The company is committed to sustaining and expanding this segment while exploring emerging opportunities such as carbon capture, utilization, and storage (CCUS). Management views CCUS as a potential game-changer for sustainable energy services and expects it to become a major growth driver.

7. PVS will mainly be a contractor in the project to export electricity to Singapore. Management reiterated that this is a high-capex project, and PVS intends to participate primarily as a contractor. Any decision to take on an investor/developer role will depend on the project's profitability outlook. The company also noted potential expansion of the project to include electricity exports to Malaysia.

8. Land lease expenses related to Sao Mai Ben Dinh (PSB: UPCoM; a 51%-owned subsidiary of PVS). According to PVS, the cost essentially reflects retroactive rent payments for land that had been used rent-free for years.

• The total estimated liability is VND676bn, including VND157bn for Phase 1 (2008–2015) and VND519bn for Phase 2 (2018–2024). For Phase 1, PSB is working with authorities to verify the actual land area used. For Phase 2, PSB is seeking a 14-year exemption by reclassifying the Sao Mai Ben Dinh Supply Base as a seaport project under Decree 118/2015, citing that the original investment license did not specify the supply base function. 
• PVS booked a VND252bn provision in 2024 and we forecast another provision of VND250bn in 2025. 
• According to PVS, PSB directly uses only 23.5% of the total leased area. The remainder is shared with (1) PTSC Shipyard (PVY: UPCoM, 28.75% owned by PVS), which uses 48.4%, and (2) PXS (UPCoM, not owned by PVS), which uses 28.1%. In principle, PSB will pay the full land rental upfront and subsequently recover the respective portions from PVY and PXS based on their land usage.
• While we await the final resolution expected by the end of May, we see insignificant changes to our forecast.

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