Despite a volatile market that caused stocks to drop in recent months, the prospects for shares in the three largest Vietnamese petrol retailers remains positive for 2018, according to Viet Capital Securities Corp (VCSC).
The three petrol companies are Vietnam National Petroleum Group (Petrolimex), Binh Son Refining and Petrochemicals Corporation (BSR) and PetroVietnam Oil Corporation (PV Oil).
Their share prices have declined sharply since the beginning of the year. Petrolimex shares, which are listed on the HCM Stock Exchange as PLX, have lost total 20 per cent since early April.
The other two companies are trading on the Unlisted Public Company Market (UPCoM). BSR (UPCoM: BSR) and PV Oil (UPCoM: OIL) shares have shed 46.3 per cent each since early March 2018.
The decline of those shares was recorded at the same time as Viet Nam’s benchmark VN-Index fell sharply from its all-time peak of 1,204.33 points made on April 9, 2018.
Despite the market’s recent recovery, the three companies’ shares have shown little improvement and the situation has sparked concerns among those companies’ shareholders and investors about whether they remain opportunities in the few months left, especially given the continuous volatility of the stock market.
In the first six months of 2018, Petrolimex earned VND96.75 trillion (US$4.3 billion) worth of revenue and VND2 trillion worth of post-tax profit, which increased by 31 per cent and 16 per cent year on year.
The respective figures are VND55.87 trillion and VND3.4 trillion for BSR, which rose 45 per cent year on year in revenue but fell 7 per cent in post-tax profit.
Petrolimex and BSR have fulfilled 61 per cent and 72 per cent of their targeted revenues for 2018. The two firms have completed 56.2 per cent and 99 per cent of their targeted profits for the year.
Meanwhile, PV Oil recorded VND29.5 trillion in revenue and VND320 billion in pre-tax profit for the first half of the year, accounting for 72 per cent and 94 per cent of its full-year earnings targets.
According to Viet Capital Securities Corp (VCSC), the three companies’ shares still have room to grow this year as Viet Nam’s petrol refinery and distribution industry has significant potential and the country is short of petrochemical products.
The compound annual growth rate (CAGR) of the country’s petrol consumption in the next five years is estimated at 5 per cent each year, higher than a 1.3 per cent rate of the world.
Such growth is calculated based on the country’s economic growth rate, strong industrial production, low mechanisation rate, low tax rates imposed on automobiles and increasing number of vehicles.
The CAGRs of Viet Nam’s petrol and diesel consumption in the last five years are estimated at 3.5 per cent and 4.7 per cent per year. Meanwhile, the growth of the aviation sector is expected to help increase demand of airplane fuel by 8.5 per cent per year.
Economic growth also helps raise demand for petrochemical products. Economic growth would lead to increase in demand for food and beverages, construction and infrastructure development in Viet Nam.
VCSC said BSR is the only oil refiner in Viet Nam and provides a third of the country’s total petrol amount. Its products are transported to sellers in Viet Nam, including Petrolimex and PV Oil.
However, only 70-80 per cent of the country’s petrol demand is met and though many firms have entered the petrol market, VCSC forecast demand would outpace supply in years, helping BSR earn more from selling its products.
Petrolimex and PV Oil are the two biggest petrol sellers in Viet Nam, holding 48 per cent and 22 per cent market shares, according to VCSC.
Petrolimex has the largest petrol station in Viet Nam, large warehouse capacity and is the most reputable seller in the market. Meanwhile, PV Oil is trying to develop its own station network to maximise sales and ensure consistent earnings in the future. — VNS