Investment Recommendation

GAS_BUY_TP 110,200_Upside 18.8_Prospects prosper_BSC company update

Date

17/03/2021
Language

Tiếng Việt
Number of Downloads

143

Detailed report

Valuation

We raise our recommendation from NEUTRAL to BUY with a 2021 target price of 110,200 VND/share (+22% compared to the closing price on 16/03/2021) due to (1) re-evaluating the oil price outlook for 2021 to $57/barrel and (2) raise the target P/E ratio for 2021 to 18x.

Forecast of business results

BSC forecasts that GAS's parent company's revenue and NPAT in 2021 will reach VND 77,145 billion (+20% yoy) and VND 11,718 billion (+50% yoy), 2021 FW EPS = VND 6,122/share with the assumption ( 1) Sao Vang - Dai Nguyet field adds 1.5 billion m3 of gas/year (+16% of output), and (2) the average oil price in 2021 will reach $57/barrel (+36% yoy).

Catalyst

The proportion of GAS shares in iShare fund is expected to increase from 0.14% to 0.35% in 2021, equivalent to a purchase value of USD 0.8 million (Refer to Link for details).
The LNG segment is the long-term growth driver, helping GAS to be reassessed.

Investment Thesis

Average oil price in 2021 is forecast to recover to $57/barrel, helping to improve GAS's profit. It is estimated that a $10 increase in oil price will improve GAS's gross margin by 3% - 4%.
Sao Vang – Dai Nguyet gas field will be put into operation from November 2020, supplementing from 1.5 billion m3 of gas/year from 2021.

Risks

Upstream incidents that cause unplanned reductions/stops of gas supply at blocks/fields.

Company Update

In 2020, GAS recorded Net revenue = 64,150 billion VND (-15% yoy) and NPAT = 7,928 billion VND (-35% yoy) due to (1) ashore gas production decreased by -11% yoy and (2) oil price dropped to an average of 42 USD/barrel (-34% yoy) in 2020.
LNG Thi Vai project is constructed on schedule, expected to be completed in Q4/2022.