The Oil and Gas Industry’s Value Chain
Leading Position in the Retail Fuel Industry
PLX is the top player in the domestic fuel retail industry, consistently maintaining a market share of around 47%. This puts it far ahead of its competitors, including the Vietnam Oil and Gas Group (UPCoM: OIL), Thanh Le Import-Export Trading JSC (UPCoM: TLP), and Saigon Petro Co., Ltd.
Domestic Fuel Retail Market Share in 2023
(Unit: Percentage)
Source: VietstockFinance, PLX, OIL, TLP, and Saigon Petro
PLX distributes its fuel products through three channels: the dealer/total dealer (DODO) system, the retail (COCO) channel, and industrial customers. To date, PLX maintains a significant advantage over its competitors with 48 member units directly involved in domestic fuel operations and more than 4,790 fuel stations nationwide.
The company’s supply sources include the Dung Quat and Nghi Son refineries and imports mainly from Southeast Asian and Korean markets, leveraging Vietnam’s preferential import tax policies from free trade agreements (FTAs). However, the import-reliant nature of the business makes the financial performance of fuel retailers more susceptible to fluctuations in international oil prices.
Source: PLX Annual Report
Unfavorable Financial Results in Q3 2024
In the third quarter of 2024, Petrolimex recorded a 11% year-on-year decline in revenue, reaching 64.3 thousand billion VND, while its gross profit margin improved slightly from 5.22% to 5.34%. However, net profit plunged by 91% to only 66 billion VND.
Nevertheless, the cumulative results for the first nine months of the year exceeded the set plan, with revenue reaching nearly 213 thousand billion VND and pre-tax profit at 3.2 thousand billion VND, surpassing the 2024 plan by 13% and 10%, respectively.
Given the unlikely prospect of oil prices climbing above $80 per barrel, it would be unreasonable to anticipate positive financial outcomes in the fourth quarter of 2024.
Financial Performance of PLX from 2020 to Q3 2024
(Unit: Billion VND)
Source: VietstockFinance
Positive but Unspectacular Outlook for 2025
Goldman Sachs forecasts an average Brent crude oil price of $76 per barrel in 2025, based on moderate crude oil surpluses and spare capacity. Meanwhile, concerns about potential supply disruptions from Iran have eased. This suggests that a sideways trend is likely to dominate the market in the coming year.
In theory, when fuel prices rise, retailers with larger inventories of lower-priced fuel stand to gain more. Conversely, when prices drop sharply, businesses incur significant losses due to provisions for high-priced inventories. Given Goldman Sachs’ prediction, PLX is unlikely to experience a significant surge in financial performance next year.
However, there is more room for optimism than pessimism. According to the Ministry of Industry and Trade, the new Decree on fuel business proposes a formula for fuel selling prices, allowing enterprises to calculate prices independently. The government will announce the price-forming factors, and enterprises will determine the selling prices, implement price registration, and send price registration documents and price announcements to the state management agency for supervision. This, along with other adjustments, is expected to improve PLX‘s profit margins from operations. The fourth draft, which replaces Decree No. 83/2014/ND-CP and its amendments, is anticipated to be approved by the end of 2024 and take effect from early 2025.
PLX’s Revenue Sensitivity Analysis
Source: VietstockFinance
PLX Stock: Fairly Valued
As the leading company in the fuel business, distribution, and retail in Vietnam, PLX is compared with peers in the region (India, China, Malaysia, South Korea, etc.) to determine its fair value.
Comparison Table of PLX with Regional Peers
Source: Investing.com
Using a weighted combination of the P/E and P/S methods, we arrive at a fair value of 47,550 VND per share. Therefore, the current market price presents an attractive buying opportunity for long-term investors.
Enterprise Analysis Division, Vietstock Consulting Department
PLX – A Fair Valuation Stock for Long-Term Investors
As the leading retailer in the Vietnamese petroleum industry, Petrolimex (HOSE: PLX) is an attractive prospect for investors seeking long-term opportunities. The stock is currently trading at a reasonable level, presenting a prime opportunity for those looking to buy into this powerhouse of a company.
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The Pennies-for-Dollars Stock List
As of the market close on 11/10/2024, the VN-Index stood at 1,288 points, marking a notable 14% increase since the beginning of the year, equivalent to a rise of 157 points. However, not all stocks have fared equally well. Some have plummeted or stagnated over the past year, lingering in the notoriously low-priced “tea and chat” zone.
