VOS_BUY_TP 19,000 VND_Upside 17%_Benefiting from continued high freight rates in 2022_BSC Company Update

VALUATION

BSC recommend BUY for VOS shares with  a fair value of VND 19,000 per share in 2022, equivalent to Upside 17% of the closing price on June 3, 2022, based on the P/E method with the 2022 target P/E = 6.1x.

Although VOS’s NPAT in 2022 is forecast to reach 434 billion items(-11% yoy) due to the high base  2021 revenue recognition, however, BSC said that VOS is still being revalued as core business remains positive results thanks to high dry freight rates.

BUSINESS RESULTS FORECAST

For 2022, BSC forecasts VOS to record revenue of VND1,944 billion (+37% yoy), NPAT of VND434 billion (-11% yoy), EPS FW 2022 = 3.103, corresponding to P/E FW 2022 = 5.2, based on the following key assumptions:

1.       Average freight rate increased by +30% compared to 2021 due to high global freight rates

2.       Tonnage kilometer reached 17,130 megaton.km (+8% yoy) as a result of i) A slight increase in global tonnage kilometer , ii) New contributions from 2 oil tankers;

3.       Interest expenses reached VND78 billion (-30% yoy) thanks to a significant decrease in debt (VND 690 billion) in 2021.

INVESTMENT THESIS

§   VOS's transport business remained positive as dry freight rates continue to high in 2022

BUSINESS UPDATE

§  At the end of Q1/2022, VOS recorded revenue of VND402 billion (+58% yoy), profit after tax reached VND 56 billion, while the same period reached -19 billion thanks to i) Dry freight rates continued to be high in Q1/2022, ii) New contributions from the two oil tankers Dai An and Dai Phu.

§  Gross profit margin reached 24%, down sharply from 38% in Q4 2022 due to i) Dry freight rates in Q1 are lower than in Q4/2022, ii) 4/7 ships of VOS  were repaired  momentun in Q1, therefore,  there are 1.5 ships generating revenue out of a total of 3 ships .

RISK

§  Risk of freight costs or material costs