BSR_BUY_TP 28,400 VND_Upside 15__Bright outlook thanks to rising oil prices

Valuation

BSC recommends BUY for BSR with a target price of VND 28,400/share (equivalent to 15.9% upside compared to the closing price on November 3, 2021 at VND 24,500/share) based on P/E and FCFF methods .

Forecast of business results

§ BSC forecasts that BSR's 2021 business results will reach net revenue and NPAT of VND 90,952 billion (+57% yoy) and VND 5,147 billion, respectively, EPS FW = VND 1,627/share base on assumptions: (1) Product sales volume oil and gas is estimated at 6.3 million tons (+6% yoy), (2) Consumption price increased by 40% yoy due to the strong recovery of oil price, and (3) Financial revenue reached VND 825 billion (+24% yoy).

§ BSC forecasts that in 2022, BSR's net income and NPAT will reach VND 108,313 billion (+19% yoy) and VND 6,282 billion (+22% yoy), respectively, EPS FW = VND 1,986/share  base on assumptions: (1) Oil price average in 2022 will reach 82 USD/barrel (+14% yoy); (2) Consumption of petroleum products reached 6.6 million tons (+5% yoy); and (3) The preferential policy of 0% crude oil import tax continues to be maintained.

Investment Thesis

§ Crude oil price increased sharply to over 80 USD/barrel, supporting BSR's business activities.

§ Top market share in the oil refining industry, with regular operating efficiency of over 100%.

§ The prospect of increasing oil consumption is positive thanks to the control of the epidemic.

Risks

§ Crude oil input prices fluctuated strongly.

§ Competition increases when gasoline import tax is gradually reduced to 0% by 2024.

Company Update

§ In 9M2021, BSR's revenue is VND 66,599 billion (+63% yoy), completing 94% of the year plan, and NPAT is VND 3,998 billion, exceeding 360% of the whole year 2021 plan.