Fitch Ratings assigns PV Gas 'positive outlook'

Fitch Ratings has assigned PV Gas, a subsidiary of state-run Petrovietnam, a long-term foreign-currency issuer default rating (IDR) of “BB” with a positive outlook, the Vietnamese firm announced Thursday.

PV Gas cooperated with the Singapore branch of Japan’s Mizuho Bank Ltd. throughout the rating process.

PV Gas, listed on the Ho Chi Minh Stock Exchange (HoSE) as GAS, was assessed with a standalone credit profile (SCP) of “bb,+” but its IDR was capped by the parent firm Petrovietnam.

GAS’s SCP of “bb+” reflects a strong market position as the sole midstream gas distributor, the first liquefied natural gas (LNG) importer in Vietnam, and diversified earnings from a regulated liquefied petroleum gas (LPG) business with 70% of the market share. Its position as the sole long-term gas supplier for a majority of its customers and long-term contracts with price protection provide a stable earnings source.

GAS is well-positioned to benefit from Petrovietnam’s plans for significant upstream expansion to increase gas production volumes, Fitch Ratings said.

GAS has high earnings visibility from its dry gas segment, due to a combination of long-term tariff-based contracts for gas transportation and gas sales contracts with a minimum selling price set at the wellhead price. The gas segment, including dry gas, condensate and self-produced LPG, will account for 90% of GAS's gross profit in 2023, before gradually declining to 70% in 2027, the rating agency added.

PV Gas earned a post-tax profit of VND15,066 billion ($636.38 million) on a revenue of VND100,724 billion ($4.25 billion) in 2022, up 70.2% and 27.5% year-on-year, respectively, according to the firm’s audited consolidated financial statement.

GAS shares inched up 0.19% to VND107,000 ($4.52) each on Friday.