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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
7/2/2013 Private and Confidential
PetroVietnam Drilling
Company report
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2
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Agenda
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Case Summary
Company and business overview
Companys operation analysis
Companys financial analysis
Industry analysis
1
2
3
4
5
Agenda
Valuation summary 6
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3
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
PetroVietnam Drilling Company (PVD HOSE) - BUY Investment Case
Attractive valuation, supported by rising day-rates:
PVD is expected to outperform regional peers in terms of ROE (38.7% vs. 15.9%) and ROA (21.6% vs. 5.8%)
PVD is trading at 9.4x EV/EBITDA, 30% discount to regional peers of 13.4x
We initiate PVD with FY2013E TP of VND60,600, represent a 28.3% upside potential
Being a subsidiary of PVN, PVD is able to secure many drilling contracts from PVN and its partners for E&P projects carried out in Vietnam territorial waters
Above-average attractive industry: Vietnam Oil & Gas industry is on the rising trend as supply is always lagged behind supply for the recent years
Investment Rationales:
Key investment Risks:
Day-rate pricing risk: PVDs day-rate is highly correlated to the regional rig utilization and oil prices. Any absurd movement in these factors will have significant impact to the companys top and bottom lines
Political risk: Over the next few years, Vietnams E&P activities will extend eastward and
northward from the current producing Nam Con Son and Cuu Long basins. Potential conflict
over the territorial waters claimed by China and Vietnam will be major issues in the coming
years
Dependency on PVN PVN is owning 50.5% of PVD and having strong influence over the Companys business strategy and policy (the recent private placement at ~30% discount compared to market price to PVN is one example)
Investment Fundamentals:
Items (USDmn) FY2012A FY2013E
Net revenue 573 670
Operating EBIT 91 109
Reported net profit 63 79
EPS (VND) 6,351 7,418
EPS growth 21.7% 14.5%
DPS (VND) 1,500 1,000
ROA 7.0% 7.9%
ROE 20.0% 19.7%
Net debt to equity 82.1% 54.8%
PVN 50.5%
DB 6.1% PVFC, 4.0%
VCB, 2.6%
Other domestic investors,
6.2%
Other foreign
investors, 30.6%
Shareholder structure as of 31/12/2012
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Agenda
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Case Summary
Company and business overview
Companys operation analysis
Companys financial analysis
Industry analysis
1
2
3
4
5
Agenda
Valuation summary 6
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5
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Company profile Overview of PVD
Key operations of PVD
Drilling service Drilling related
services
Established in 2001, a subsidiary of PetroVietnam Group
The sole provider of drilling services in the group
Major domestic player, ~50% driling service maket share (2012)
Emerging international player, operations in Algeria, Malaysia
Net profit USD63.5mn (VND1,697bn) in 2012, a 38% growth from 2011
Operation highlights
Asian Drilling Contractor
in 2012*
Consecutive years of
Zero Lost Time Incident
Average utilization rate
in 2012
#1
4
98,7%
(*) "The Best Oil and Gas Drilling Contractor in
Asia, 2012" award from the World Finance
Magazine
Drilling services
49%
Technical services
39%
FY2012A Revenue
Trading
13%
Drilling services,
56%
Technical services,
42%
Trading 2%
FY2012A Gross Profit
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Shareholder structure & rig fleet Overview of PVD
PVDs has grown quickly to become a major drilling
contractor. Market share has increased from 10% to 50%.
PVD now owns three jackups, one tender and one land rig.
All three jackup rig have operating depth of 300+ feet in
water. The new tender rig can operate in 5,000 feet,
specializing in deep water areas.
Rig name Type
Water
depth
(ft.)
Drilling
depth
(ft.)
Cost
(USDmn) Year built Status
PV Drilling I Jackup IC 300 25,000 114 2007 Drilling
PV Drilling II Jackup IC 400 30,000 215 2009 Drilling
PV Drilling III Jackup IC 400 30,000 215 2009 Drilling
PV Drilling V Tender 4,000 30,000 220 2011 Drilling
PV Drilling 11 Land rig NA NA 20 2007 In Algeria
Hi-spec jackup rig I Jackup IC NA NA 230 2013 To be completed Q4-2013
Hi-spec jackup rig II Jackup IC NA NA 230 2014 To be completed 2H-2015
10% 10%
30%
50% 50%
60%
0%
20%
40%
60%
80%
FY2007A FY2008A FY2009A FY2010A FY2011A FY2012A
PVDs market share by years
Source: Company data, Macquarie research
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Corporate structure Overview of PVD
PVN
PV Drilling
100% owned companies
PVD Logging
PVD Offshore
PVD Well Services
PVD Tech
PVD Deepwater
Subsidiaries
PVD Training
PV Drilling - Baker Hughes
BJ - PV Drilling
PVD - PTI
PVD
Tubulars Management
Vietubes
PVD - OSI
PVD - FEG
Factories & branches
PVD Drilling Division
(PVD DD)
Representative
Office in Algeria
52%
51%
49%
51%
51%
50%
51%
51%
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Agenda
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Case Summary
Company and business overview
Companys operation analysis
Companys financial analysis
Industry analysis
1
2
3
4
5
Agenda
Valuation summary 6
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Drilling services in oil & gas production value chain Industry analysis
Carried out by drilling contractors
Source: JP Morgan 2013
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Relationship between E&P* and Drilling Industry overview
Exploration
Development
Production
Services by drilling contractor Est. duration Players
Explorative drilling Well testing
Development drilling Geological consultant Well technical serives
Rig operation Repair & maintenance Oil spill services
2 months 1 year
3- 5 years
10 20 years
GSF, TSF, Diamond
Offshore,
Atwood Oceanic, Ensco,
Seadrill etc.
Weatherford, ITS,
Schlumberger,
Halliburton, International
Logging,
Geoservices
GSF, TSF, Diamond
Offshore,
Atwood Oceanic, Ensco,
Seadrill etc.
(*) E&P: exploration & production Source: PVDs prospectus
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Growing activities due to declining oil reserve Vietnam E&P
Oil & gas shortage projection
Demand for oil is increasing, while current oil field is declining in
reserve. Demand for E&P and drilling
activities is, thus, expected to grow
faster in near future.
250 wells to be explored between 2011 2015.
Source: PVN
Source: NCE Subsea
*FDP: field development plan
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Vietnam, the next destination for E&P activities Vietnam E&P
Vietnam has large yet unexplored oil and gas reserves. The reseve/production ratio
is the highest in Southeast Asia.
With the potentials, Vietnam has attracted 53 companies carrying out E&P activities,
the second most in Southeast Asia.
Vietnam's oil & gas reserves/production ratio (yrs) (2011)
Vietnam's proven oil & gas reserves (2010)
Number of Companies Carrying Out E&P Activities (2011)
Source: Macquarie Research
Source: Macquarie Research
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Companies have to go further offshore for E&P activities Vietnam E&P
Extensive production in shallow water makes oil
companies go further
offshore for new oil wells.
Undiscovered oil potentials lie mostly in deep water
(Nam Con Son, Tu Chinh
Vung May).
Budget for e&p and drilling activities will, thus, be
increased as it is more
costly to produce oil in
deep water.
Oil potential by basin
Discovered Undiscovered
millions of m3 oil equivalent
Tu Chinh Vung May basin
Source: PVN
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Notable foreign E&P activities by PVN Vietnam E&P
USA
Russia
Venezuela
Lot Junin 2
Reserve: 36bn bbl
First production date:
26/09/2012
Lot 433A
Reserve: 687 mil bbl
First production date:
06/2014 (est.)
Algeria
Lot M2
Discovered natural
gas in 6/2013
Lot SK 305
Reserve: N/A
First production date:
08./2012
Lot PM 304
Reserve: N/A
First production date:
2006
Malaysia
Myanmar
Lot Nhenhexky
Production date: 09/2010
Lot Nagumanov
Production date: 11/2012
Production
Development
Exploration Source: PVEP
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Demand correlates with oil price, utilization rate & type Supply/Demand Dynamics
01 02 03 04 05 06 07 08 09 10 11 12 13
Ulitzation rate of Jackup by types
Source: Morgan Stanley Research 2013
Historical Jack up dayrate 000USD/day
Crude oil prices is highly correlated with demand for offshore rigs.
Higher demand for rigs leads to higher utilization rate and day rate.
Rigs with higher operating depth tend to be preferred over lower ones.
Source: Morgan Stanley Research 2013
Source: Douglas-Westwood 2013
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Tender
PV DrillingV
PVD: PV Drilling V x
Semisub
Ocean General
x Diamond
offshore:
Ocean General
Songa Offshore:
Songa Venus
x
Classification of rigs operating in Vietnam Supply/Demand Dynamics
Fixed platform
Example Suppliers Shallow
water
Jack up
Midwater
Typically in Bach Ho field
PV Drilling I, II, III
Mobility
N/A
Seadrill: WestAriel, West Prospero
Vietsovpetro: , Tam Dao 01, Tam Dao
02
Ensco: ENSCO 107 UMW: Naga 2 PVD: PV Drilling I, II, III
Not available
Deep & ultra
deep
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Agenda
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Case Summary
Company and business overview
Companys operation analysis
Companys financial analysis
Industry analysis
1
2
3
4
5
Agenda
Valuation summary 6
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Jackup fleet PVDs operation
Type Independent legs, Cantilever
Built/year KFELS Singapore/2009
Legs Three legs 517ft
Water depth 400ft
Max drill depth 30,000ft
Clients served Vietsovpetro
Achievements 02 Years Without LTI
2009-2011
Type Independent legs, Cantilever
Built/year KFELS Singapore/2009
Legs Three legs 517ft
Water depth 400ft
Max drill
depth 30,000ft
Clients
served
KNOC,
Petronas Vietnam, PVEP POC.
Type Independent legs, Cantilever,
Built/year KFELS Singapore/2007
Legs Three legs 437ft
Water depth 400ft
Max drill depth 25,000ft
Clients served
Hoang Long JOC.
Japan Vietnam Petroleum Co.,
Ltd (JVPC), Petronas Vietnam
Limited
Achievements
Longest Basement Well Drilled
in 2008
04 Years Without LTI
2007-2011
PV Drilling I PV Drilling II PV Drilling III
LTI: Lost Time Incident
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Young & deep water operating jackup fleet PVDs operation
0 5 10 15 20 25 30 35
Cuu Long
Tam Dao 01
Ensco 107
West Prospero
WestAriel,
Naga 2
PV Drilling III
PV Drilling II
PV Drilling I
Tam Dao 02
PVDs fleet
Other contractors
0 50 100 150 200 250 300 350 400
PV Drilling II
PV Drilling III
Ensco 107
West Prospero
WestAriel,
Naga 2
PV Drilling I
Cuu Long
Tam Dao 01
Tam Dao 02
PvDs feelt is relatively young and deeper operating depth
Fleets age
age ft
Fleets water depth
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Tender rig & land rig PVDs operation
Type Semi-Submersible Self Erecting
Tender Assist Drilling Rig
Builder/ Year Build KFELS SINGAPORE/ 2011
IMO Certification IMO MODU Code 1989
Unit Flag Vietnam
Overall Length 367 ft
Water depth Up to 5,000ft
Gross Tonnage 15,839 T
Max Drill Depth 30,000 ft below mud line
PV Drilling V is the 8th TAD in the world, which is the
latest generation of its kind.
Type Electric VFD Rig
Design CHUANGYOU GUANGHAN HONGHUA Ltd
Built/ year HONGHUA/ 2007
Rig rated depth 5,000m 7,000m for nominal drilling DP 5
PV Drilling 11 is drilling at field MOM-3 of PVEP in Algeria.
PV Drilling V PV Drilling 11
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Tight bond with PVN helps secure drilling contracts PVDs operation
All of PVDs clients are related to PVN (PVN owns 50.5% stake in PVD). With
the strong bond, PVD is likeyly to secure
contracts from PVN
With current high demand for E&P activities, PVDs dayrate & utilization rate is forecast to grow in near future.
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
High utilization rate & growing dayrate projected PVDs operation
127,165 128,057 145,235
153,949 153,949
205,000 205,000 205,000 205,000 205,000
30,500 30,500 30,500 30,500 30,500
0
50,000
100,000
150,000
200,000
250,000
2011 2012 2013 2014 2015
USD/day PVD's fleet average dayrate
Jackup Tender rig Land rig
Rig Client Dayrate
(US$) Start End Months Revenues
days - 2013
Owned fleet
PVDI Cuu Long JOC
150,000 Jul-13 Aug-14
13.0
180
Cuu Long JOC
130,000 Jun-12 Jun-13
12.0
180
PVD II Lam Son JOC
150,000 Jul-13 Jul-14
12.0
180
JVPC
140,000 Mar-13 Jun-13
3.0
90
JVPC
130,000 Jul-12 Mar-13
8.0
90
PVD III VietsovPetro
162,000 Jul-13 Apr-14
9.0
120
VietsovPetro
150,000 Jan-13 Jun-13
5.0
180
Average Day rate
145,235
1,020
Leased fleet
GSF Key Hawaii (IC 300ft) PVEP (Hong Long) 130,000 Jan-13 Sep-13
9.0 270
Ocean Patriot Semisub Idemitsu
270,000 Sep-12 Apr-13
7.0 120
Ensco 107 jackup Thang Long JOC
150,000 Mar-13 Sep-13
6.0 210
Naga 2 Hoang Long JOC
162,000 Jul-13 Dec-13
6.0 180
West Tunaca PVEP (Dai Hung)
162,000 Jul-13 Dec-13
6.0 180
Average Day rate
163,875
960
PVD V (TAD) Bien Dong POC
205,000 Jan-12 Jan-17
60.0 360
Land rig GBRS JV
30,500 Jan-12 Jan-14
24.0 360
Utilization rate FY2011A FY2012A FY2013E FY2014E FY2015E
Land Rig Dayrate 12.5% 95.0% 95.0% 95.0% 95.0%
Jackup Own fleet 100.0% 96.3% 96.3% 96.3% 88.6%
Semi- tender rig 87.5% 99.0% 99.0% 99.0%
Jack-up rig I 99.0% 99.0%
Jack-up rig II 50.0%
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Agenda
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Case Summary
Company and business overview
Companys operation analysis
Companys financial analysis
Industry analysis
1
2
3
4
5
Agenda
Valuation summary 6
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24
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Revenues & Profit Summary PVDs finance
Revenues and profit grow steadily thanks to larger fleet and better dayrate 4
50 5
73
663
731
830
60
81
100
11
9
130
9.7%
35.7%
22.7%
19.3%
8.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
-
100
200
300
400
500
600
700
800
900
1,000
FY2011A FY2012A FY2013E FY2014E FY2015E
PVD's revenue & profit (USDmn)
Net revenue EBT EBT Growth
22.3% 22.5% 22.9% 24.4% 23.6%
23.7% 24.4% 24.4% 26.6% 26.6%
11.6% 11.1% 11.7% 12.7% 12.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
FY2011A FY2012A FY2013E FY2014E FY2015E
Key Margin Ratios
Gross profit margin EBITDA margin Net profit margin
Items (USD million) FY2011A FY2012A FY2013E FY2014E FY2015E
Net revenue 450 573 663 731 824
Operating EBIT 72 91 108 130 137
Reported net profit 52 63 78 93 97
EPS (VND) 5,175 6,351 7,355 8,091 8,606
EPS growth 10.1% 21.7% 13.5% 7.8% 4.3%
DPS (USD) - 0.11 0.06 0.05 0.08
ROA 6.3% 7.0% 7.8% 8.3% 8.0%
ROE 18.1% 20.0% 19.5% 18.6% 16.9%
Net debt to equity 116.6% 82.1% 55.0% 49.3% 40.5%
Revenue CAGR: 13%
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Earning drivers PVDs finance
Drilling services, technical related services are two main earning drivers
24.8% 25.2% 24.8%
29.5% 28.0%
22.3% 22.5% 22.9% 24.4%
23.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
FY2011A FY2012A FY2013E FY2014E FY2015E
PVD's gross margin by segment
Drilling Technical services Trading Overall
Drilling service contributed 59% to companys profit in 2012
2015s gross margin is forecast to decrease as company is planning to have big
maintenances for two months, along with flattening dayrate.
58.2% 59.5% 58.9% 59.4% 55.4%
36.2% 38.4% 37.8% 37.4% 41.3%
5.7% 2.0% 3.3% 3.1% 3.3%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
De
c-1
1A
De
c-1
2A
De
c-1
3E
De
c-1
4E
De
c-1
5E
$ mil. PVD's gross profit breakdown
Others - Commercials Technical Services Drilling
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Jackup fleets contribute the most to drilling serive PVDs finance
Jackup fleet (including owned and leased fleet) contributed 77% and 63% to drilling revenue &
gross profit in 2012
79.0%
48.5% 50.3% 47.0% 37.7%
11.1%
14.6% 16.2%
9.0%
9.2%
2.5%
32.8% 30.0%
23.8%
22.8%
17.2%
18.5%
9.0%
7.4% 4.1% 3.5% 2.9% 2.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-11A Dec-12A Dec-13E Dec-14E Dec-15E
PVD's drilling gross profit breakdown
Jackup owned fleet Jackup leased fleet Tender rig
Jack-up rig I Jack-up rig II Land Rig Drilling Services
55.6% 40.4% 38.4% 39.5% 35.1%
39.3%
36.8% 40.2% 26.6% 25.7%
19.7% 18.7%
18.2% 17.1%
9.9% 9.3%
13.1% 13.2%
2.2% 3.1% 2.7% 2.6% 2.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-11A Dec-12A Dec-13E Dec-14E Dec-15E
PVD's drilling revenue breakdown
Jackup owned fleet Jackup leased fleet Tender rig
Jack-up rig I Jack-up rig II Land Rig Drilling Services
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Technical serivces enhance value of drilling serivces PVDs finance
Technical services comes with drilling service as a full package. The higher quality of the technical service, the more value is added to drilling service.
PVD already has a full range of service so this operation is forecast to stabilize in terms growth from 2013 to 2015.
12%
38%
15%
20% 20%
14% 12%
10%
15% 15%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
-
100.0
200.0
300.0
400.0
Dec-11A Dec-12A Dec-13E Dec-14E Dec-15E
USDmn Technical services & others revenue growth
Technical Services Others - Commercials
Services revenue growth Commercial revenue growth
45%
-53%
92%
15% 15% 22%
40%
15%
20% 20%
-80.0%
-40.0%
0.0%
40.0%
80.0%
120.0%
-
20.0
40.0
60.0
80.0
100.0
Dec-11A Dec-12A Dec-13E Dec-14E Dec-15E
USDmn Technical services & others gross profit growth
Technical Services Others - Commercials
Services gross profit growth Commercial gross profit growth
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Planning to construct two new jackups PVDs finance
FY 2013E FY 2014E FY 2015E
New Jackup rig I
Total Investment 115
Debt (70%) 80.5 - -
Equity (30%) 34.5 - -
New Jackup rig II - - -
Total Investment - 115 115
Debt (70%) - 80.5 80.5
Equity (30%) - 34.5 34.5
Total investment 115 115 115
FY2013E FY2014E FY2015E
Maintenance capex 32.1 25.0 25.0
New capex 115.0 115.0 115.0
Total capex 147.1 120.0 120.0
Project Cost
(USDmn) PVDs stake
PVDs capex (USDmn)
Timeline
New Jackup rig I 230 50% 115 1H2013- Q42013
New Jackup rig II 230 100% 230 2014 2H2015
Total 460 416
FY2011A FY2012A FY2013E FY2014E FY2015E
Short term debt 98 93 109 104 99
Current portion of long term debt 73.0 73.8 88.8 82.2 78.3
Long-term debt 280.9 233.7 225.5 223.8 226.0
Avg interest rate on debt 3.6% 4.1% 4.1% 5.1% 6.0%
Interest expense (13.0) (14.5) (13.6) (16.9) (19.6)
Net debt to equity 116.6% 82.1% 55.0% 49.3% 40.5%
New capex requires more new loan drawn
and, thus, increases interest expense.
Future equity injection and earnings are
expected to offset the increase in debt and
make net debt to equity ratio decrease.
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
New private placement PVDs finance
Number of shares Price (VND) Lockup
period
(years)
% discount
to
01/07/2013
price
Notes
New share issuing 40,000,000 33,000
To PVN 20,152,000 32,450 3 30% Equivalent PVDs book value on 06/30/2012
To financial investors 17,848,000 45,200 1 4% According to HSCs daily news 06/17/2013
ESOP 2,000,000 10,000 1
PVD is to issue 40mn new shares to increase total shares issued to 250mn from 210mn currently
Price issued to financial investors will be based on market price, but not less than the companys book value at the time of issuance (expected to be ~40,000/share by 1H2013E)
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Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
R = 0.64 Correlated coefficient: 0.8
20
25
30
35
40
45
50
55
34.5 35 35.5 36 36.5 37 37.5
Close price (VND)
Foreign ownership (%)
PVD Price & Foregin ownership
Stock price correlated with foregin trading activities Foreign ownership
34
34.5
35
35.5
36
36.5
37
37.5
38
30
35
40
45
50
55
5/2
8/2
012
6/2
7/2
012
7/2
7/2
012
8/2
6/2
012
9/2
5/2
012
10
/25
/201
2
11
/24
/201
2
12
/24
/201
2
1/2
3/2
013
2/2
2/2
013
3/2
4/2
013
4/2
3/2
013
5/2
3/2
013
6/2
2/2
013
Foreign ownership
(%)
Close price ('000 VND)
PVD Price & Foregin ownership
Close price
Foreign ownership (%)
JPM sold 1.2
million shares
Market Vectors ETF
bought 1.0 million
shares
DB sold 400k
shares
PYN Elite
bought 500k
shares
Templeton bought
500k shares
Source: Thomson One
Market Vectors ETF
bought 600k shares
PVDs stock price is highly correlated with foreign ownership. Correlated coefficient
between two series is 0.8.
R2 coefficient = 0.64 shows a high linear relationship between foregin ownership and
PVDs stock price.
Recent surges and declines in price are related to remarkable changes in
position of foreign investors (JPM, DB,
Templeton).
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31
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Agenda
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
Case Summary
Company and business overview
Companys operation analysis
Companys financial analysis
Industry analysis
1
2
3
4
5
Agenda
Valuation summary 6
-
32
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
PVD Valuation using P/E, P/B Method Valuation summary
PVD peer group comparison:
Valuation FY2011A FY2012A FY2013E FY2014E FY2015E
EPS (VND) 5,175 6,351 7,355 8,091 8,606
BVPS (VND) 29,598 33,545 39,578 46,674 54,391
P/E (x) 9.3 7.6 6.7 6.2 6.0
P/B (x) 1.6 1.4 1.3 1.1 0.9
Fair price @ P/E 8.0x 58,842 64,724 68,850
Fair price @ P/E 1.3x 51,452 60,676 70,709
Target Price (VND) 55,147 62,700 69,779
Name Mkt Cap
(US$m)
ROE
FY12A
(%)
ROA
FY12A
(%)
Div Yield
FY12A (%)
EBITDA
Margin
FY12A
EV/EBITDA
FY12A PE (x)
FY12A PE (x)
FY13E PB (x)
FY12A PB (x)
FY13E
PetroVietnam 406 20.0 7.0 2.2 24.4 5.0 7.1 6.2 1.3 1.2
Peer Group Average 614 13.7 6.1 2.1 16.7 6.9 11.7 11.7 1.2 1.2
Top Two Quartile Average 765.9 22.9 9.8 3.3 23.7 6.3 8.4 8.4 1.7 1.7
First Quartile Avg 438.3 29.4 12.6 3 22.4 5.7 7.7 7.7 1.8 1.8
Second Quartile Avg 1,093.40 16.3 7 3.5 25 6.9 9.2 9.2 1.6 1.6
Third Quartile Avg 632.4 6.6 3.6 1.7 11 8.3 13.4 13.4 0.8 0.8
Fourth Quartile Avg 291.9 2.4 1.1 - 8.2 6.9 16.4 16.4 0.6 0.6
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33
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
PVD Valuation using EV/EBITDA Method Valuation summary
Valuation Dec-11A Dec-12A Dec-13E Dec-14E Dec-15E
Reported EBITDA
106.4
140.0
162.1
195.5
218.6
Less Minority EBITDA from TAD rig
(0.6)
(11.0)
(11.7)
(11.3)
(10.9)
PVD's Proportionate EBITDA
105.8
129.0
150.4
184.1
207.6
Net Debt
347.3
275.6
254.2
263.4
247.4
Less Minority Net Debt in TAD
(31.3)
(31.3)
(18.8)
(12.5)
(6.3)
PVD's proportionate Net Debt
316.0
244.3
235.4
250.9
241.1
Target EV @ 6.3x
666.3
812.4
947.5
1,160.1
1,307.9
Less proprtionate net debt
(316.0)
(244.3)
(235.4)
(250.9)
(241.1)
Equity Value
350.3
568.1
712.1
909.2
1,066.8
Equity Value/Sh (USD)
1.7
2.7
2.8
3.6
4.3
VND/USD Fx rate
20,828
21,453
22,525
23,652
24,834
Equity Value/Sh (VND)
64,122
85,961
105,905
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34
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
Private and Confidential
PetroVietnam Drilling Corp.s BS and P&L PVDs finance
Balance sheet FY2011A FY2012A FY2013E FY2014E FY2015E
Cash & equivalents 32 51 80 84 113
Accounts receivable 94 144 167 184 205
Inventories 48 38 44 47 53
Other current assets 14 11 11 11 12
Total current assets 188 244 302 326 383
Total investments 15 22 28 28 28
Total net fixed assets 670 633 726 781 821
In which: WIP 1 6 6 121 6
Total intangible assets 8 7 7 7 7
Other LT assets 10 11 11 11 11
Total assets 890 916 1,074 1,154 1,251
Total short term debt 98 93 109 104 99
Accounts payable 94 107 124 134 152
Accrued expenses 26 37 43 46 52
Other current liabilities 26 36 40 42 46
Total current liabilities 244 273 315 325 349
Total long-term debt 281 234 225 224 226
Long-term accounts payable - - - - -
Other liabilities 66 72 62 52 42
Total liabilities 591 579 603 602 617
Paid-up share capital 117 117 136 136 136
Retained earnings reserve 74 105 171 243 316
Other reserves 34 43 43 43 43
Total equity 299 337 471 552 633
Total liabilities & equity 890 916 1,074 1,154 1,251
P&L FY2011A FY2012A FY2013E FY2014E FY2015E
Net revenue 450 573 663 731 815
Cost of goods sold (349) (444) (511) (553) (630)
Gross profit 100 129 152 179 185
Gen & admin expenses (27) (36) (42) (46) (51)
Selling expenses (2) (2) (2) (2) (3)
Operating profit 72 91 108 130 131
Operating EBITDA 106 140 162 195 211
Operating EBIT 72 91 108 130 131
Net income from investments 4 3 6 5 5
Net interest (11) (13) (12) (14) (15)
Net exceptional income (1) 5 - - -
Pre-tax profit 60 81 100 119 119
Taxation (8) (12) (15) (18) (18)
Reported net profit 52 63 78 93 93
Ratios FY2011A FY2012A FY2013E FY2014E FY2015E
Gross profit margin 22.3% 22.5% 22.9% 24.4% 22.7%
EBITDA margin 23.7% 24.4% 24.4% 26.6% 25.8%
Net profit margin 11.6% 11.1% 11.7% 12.7% 11.4%
ROAA 6.3% 7.0% 7.8% 8.3% 7.7%
ROAE 18.1% 20.0% 19.5% 18.6% 16.3%
Net debt to equity 116.6% 82.1% 55.0% 45.6% 34.9%
Current ratio 77.0% 89.2% 95.9% 100.3% 109.7%
Quick ratio 57.2% 75.4% 82.0% 85.9% 94.4%
Cash ratio 13.1% 18.8% 25.5% 25.8% 32.3%
EPS 5,175 6,351 7,355 8,117 8,273
EPS growth 10.1% 21.7% 13.5% 8.2% -0.1%
EPS (adj. net profit) 4,637 5,060 6,473 7,143 7,280
BVPS 29,598 33,545 39,578 46,701 54,085
EV/EBITDA 7.3 5.0 4.3 4.0 3.6
PER (x) 8.6 7.1 6.2 5.8 5.8
P/B (x) 1.5 1.3 1.2 1.0 0.9
-
y ban xy dng v thc hin chin lc
B phn Ngn hng u t
a ch: 130 Phan ng Lu, Phng 3, Qun Ph Nhun, TP. HCM
T: (84-8) 3995 1483
Website: www.dongabank.com.vn
Ngi lin h: Mr. Nguyn Cao Huynh
TD: 0914.110.101
Uy ban xy dng va thc hin chin lc B phn Ngn hang u t
35 Private and Confidential