Petroleum share outlook

VNStockNews.com - The general downward trend of the stock market in recent time pulled down prices of good share codes. As for optimistic investors, this is the good time for selecting and investing in the companies with good performance, including the petroleum enterprises because their P/E ratio is lower than the average level.

Currently, there are 17 being-listed companies under PetroVietnam, accounting for 3 percent of total listed shares and 11 percent of market capitalisation. With the development potential in 2010 and following years, corporate shares of petroleum sector are attractive as for medium and long term investors.

In details, PVF of PetroVietnam Finance Joint Stock Corp has big advantage of the mandated investment capital as well as the regular deposits from PetroVietnam's members. Total assets of PVF till the end of Q3 of 2009 reached 59.249 trillion dong. As estimated, PVF targets to reach over five trillion dong of revenue and one trillion dong of profit, EPS of 1,635 dong and P/E ratio of 16.6 times-lower than the finance sector's average of 25.2 times. Total revenue for 2010 is planned at 5.9 trillion dong, profit of 1.556 trillion dong and EPS of about 2,596 dong.

Meanwhile, PVD of PV Drilling and Services Joint Stock Corp signed the contracts of leasing PV Drilling III rig with Vietsovpetro, PV Drilling 1 rig with Japan-Vietnam Petroleum Co (JVPC) and PV Drilling II rig for Bach Dang oilfield with the leasing price of $150,000 a rig a day, so the leaser's rig using efficiency has been nearly fulfilled. Also, PVD signed a deal of building a forth drilling rig Tender Assist Drilling Rig-TAD with total cost of $230 million and Bien Dong (East Ocean) JV Co committed to rent the new rig at $202,000 a day with the renting time of 4 years and a half. The forth rig will be put into operation from 2012.

Total revenue of PVD is expected at about four trillion dong in 2009, profit at 904 billion dong, and EPS of 6,814 dong this year. In 2010, the figures are planned at 5.9 trillion dong, 1.540 trillion dong and 6,270 dong. The current P/E ratio of PVD is higher than the petroleum sector's average level of 11 times, China's over 40 times, Thailand's 15 times, India's 30 times and Philippines' 20 times.

Similarly, another subsidiary PetroVietnam Nitrogenous Fertiliser Joint Stock Co (coded DPM) is the leading urea fertiliser producer of Vietnam with a market share of 40 percent. When Ca Mau fertiliser plant with a capacity of 740,000 tonnes/year came into operation, total output of DPM this year will be 1.5 million tonnes/year. From 2011, Vietnam could become the urea fertiliser exporter with the sustainable gas supply from PetroVietnam. This year DPM could gain total revenue of 6.7 trillion dong, profit of 1.433 trillion dong and EPS of 3.772 trillion dong, which will be 7.440 trillion dong, 1.701 trillion dong and 4,478 dong in 2010. The 2009 P/E ratio of DPM is estimated at 8.9 times, 2010 at 8 times against the sector's average ratio of 13 times.

Regarding PetroVietnam Insurance Corp (PVI), the enterprise ranks second in Vietnam's insurance market share with the annual growth of 43 percent in the last three months. The petroleum insurance service brought in 24 percent of total premium of PVI while the construction insurance contributed 35 percent. In 2009, revenue of PVI will be nearly 3.6 trillion dong, profit of 193 billion dong and EPS of 1,870 dong. The figures are targeted at 4.483 trillion dong, 425 billion dong and 2,662 dong next year. PVI share code now has a P/E ratio of about 12 times, lower than 25.2 times of Vietnam's finance sector.

Source: Petrovietnam Securities Inc (PSI).