AsemconnectVietnam - PetroVietnam Technical Services Joint Stock Corporation (PTSC, stock code PVS) is lacking VND8,919 billion in equity by 2030 when it has the ambition to invest in a wind power export project to Singapore.

The process of paying cash dividends may be interrupted
In addition to traditional oil and gas services, recently and again at the 2024 General Meeting of Shareholders, PTSC's Board of Directors expressed its determination to become an international service provider in offshore wind power. (Project investor instead of just providing oil and gas mechanical services as before).
In particular, to meet the large capital demand mainly due to the orientation of developing the field of offshore renewable energy, including being an EPC general contractor and participating in offshore wind power development; PTSC makes a tentative financial plan by 2030 with capital needs of up to VND70,640 billion.
Mr. Le Manh Cuong, General Director of PTSC, shared that the Company has no policy of participating in domestic offshore wind power projects and is only focusing on wind power export projects. In particular, the wind power export project to Singapore is selecting a survey contractor. It is expected that by the end of this year or at the latest in early 2025, it will complete the selection of a survey contractor to bring in survey equipment. This is a specific large-scale project that PTSC participates in.
According to the plan, the wind power export project to Singapore is implemented by PTSC with partner Sembcorp Utilities Pte Ltd (SCU), a member unit of Sembcorp Industries Limited. In particular, the PTSC & SCU joint venture will jointly research and invest in building an offshore wind power farm in Ba Ria - China region, with a total installed capacity of about 2,300 MW to export clean electricity to Singapore.
Regarding capital needs, according to PTSC's shared implementation plan for the period 2024 - 2030, the need for equity is VND17,641 billion. Of which, VND4,720 billion for the period 2024 - 2025 and VND12,921 billion for the period 2026 - 2030.
As of December 31, 2023, PTSC's equity capital used for long-term investment is VND7,889 billion, unused equity capital for investment is VND1,149 billion, additional equity capital for the first phase. The period 2024 - 2030 is VND10,128 billion (additional from annual profit after tax, additional from recovery of long-term investment capital, additional from annual depreciation source...). In contrast, the need for equity investment in the period 2024 - 2030 is VND20,196 billion, so the equity shortfall by 2030 is VND8,919 billion.
PTSC is considering options such as not paying cash dividends and using all annual profits (after deducting bonus, welfare and executive board bonuses) to supplement development investment funds; Implement charter capital increase through issuing shares, issuing shares to pay dividends... (Specific capital mobilization plan has not been announced and is seeking comments).
Regarding PTSC's business situation, from 2019 to 2022, profits will maintain from VND677 - 944 billion/year and in 2023 will exceed VND1,060 billion. However, this is still a much lower profit level than the peak period of the oil and gas industry in 2011 - 2015 (record profit of VND1,824 billion in 2014).
The business picture has improved over the past 2 years thanks to rising oil prices and anchoring in highlands, which has led to the recovery of upstream businesses in the oil and gas industry value chain.
Notably, PTSC is known as an enterprise with stable cash flow thanks to providing services upstream of the oil and gas group. In particular, from 2019 until now, this unit has maintained an attractive dividend policy, in 2019 paying at a rate of 10%, in 2020 paying 10%, in 2021 paying 8%, in 2022 paying 7% and in 2023 pay 7%.
However, by not only providing services but also participating as an investor in offshore wind power projects, this could lead to a reverse dividend policy and PTSC could even promote mobilization capital from shareholders if the survey is feasible in late 2024 and early 2025 as planned.
In addition, in addition to the characteristics of large investment capital of offshore wind power projects, the project also needs an initial operation period with certain financial and depreciation cost pressures. Therefore, from now until 2030, the cash dividend policy (like the period 2019 - 2023) may be reversed.
If the cash dividend payment plan at PTSC is interrupted, this means putting pressure on small shareholders who have long invested in PTSC to receive annual dividends, because the cash dividend policy will not be maintained for a long time.
Short term is still the mechanical & construction (M&C) sector.
In 2024, BIDV Securities Company (BSC) estimates that PTSC can record revenue increasing by 34.5%, to VND26,030 billion, profit after tax increasing by 14.3%, to VND1,177 billion (revenue plan). The company's profit is expected to decrease by 38%, to VND660 billion). Of which, revenue increased mainly from expectations that the mechanical engineering and construction contracting sectors increased by 54.1%, to VND17,183 billion; The oil and gas port base sector increased by 10%, to VND1,631 billion and other sectors fluctuated insignificantly.
In fact, PTSC's revenue structure still comes mainly from the mechanical and construction sectors; floating storage services to store, process and export FSO/FPSO crude oil; oil and gas technical vessel services; port base services. Particularly for the mechanical and construction sectors, in 2022, the Company recorded VND8,662.7 billion, accounting for 44.3% of total revenue; 2023 records VND9,471.97 billion, accounting for 45.1% of total revenue; The first quarter of 2024 recorded VND2,134.6 billion, accounting for 48.6% of total revenue.
According to analysis from BSC, for the mechanical and construction sectors, prospects come from wind power projects and oil and gas projects that are likely to record revenue and profits in the period 2024 - 2025.
Specifically, for renewable energy projects with a total contract value of about 1,390 million USD, it is expected to record revenue of 476 million USD in 2024 and 550 million USD in 2025. Of which, revenue in 2024 from Hai Long 2 & 3 Wind Power Project (Taiwan - China), Greater Changhua 2a&4 Wind Power Project (Taiwan - China), Baltica 2 Wind Power Project (Poland), Fengmiao Wind Power Project (Taiwan - China) and other projects.
For oil and gas projects, PTSC has a total contract value of about USD1,776 million, expected to account for USD226 million in 2024 and USD684 million in 2025. Of which, revenue in 2024 comes from the project. Golden Camel; Block B - O Mon project EPCI#1; Block B - O Mon project EPCI#2; Block B - O Mon project - Onshore gas pipeline; Gallaf Batch 3 project.
Regarding the progress of the Block B project, General Director Le Manh Cuong said: "We are a contractor, not a project investor. The Block B project on March 28, 2024 had a series of agreements signed to implement the project. The necessary work for project implementation is participated by all parties and many contracts have been signed. This shows that the project is being implemented aggressively. PTSC is implementing according to the agreement, on schedule, contracts No. 1, 2 and project No. 3 on pipelines have also signed official contracts, everything is on schedule and there are no factors affecting implementation of the project ".
N.Nga
Source: VITIC/Tinnhanhchungkhoan