ĐẠI HỌC UEH

TRƯỜNG KINH DOANH

KHOA TÀI CHÍNH

TIỂU LUẬN
Môn học: Đầu tư tài chính
Đề tài: Equity valuation on PetroVietnam joint
stock corporation (2017-2021) by FCFF and P/E
model. Make recommendations to investors
Giảng viên: Trần Thị Hải Lý
Mã lớp học phần:
Sinh viên: Nguyễn Tuấn Kiệt –
Nguyễn Đoàn Nhựt Băng –
Nguyễn Lê Uyên Trang – 31201022373
Phạm Vũ Nhật Linh –
Trần Lê Anh Thư -
Khóa – Lớp: K46 – FNC04
 ● Estimate Cost of Equity (Ke) through CAPM:
To calculate the cost of equity (Ke), we first need to determine the following formula:
Cost of equity (Ke) = Rf + Beta * Market Risk Premium

Where
- Rf: Risk-free rate of return, we simply takes the 2,8% which is the nominal rate in Vietnam
government bond auction, under the maturity of 10 years, published by State Treasury on 28/9/2022

Source: Vietnam’s ministry of finance

- Beta: is the Levered Beta under the new portion Debt/Equity after unleverage the current beta
through 2021 Debt/Equity ratio. Current Beta is equal to the covariance between GAS stock and VN
Index divided by the variance of VN Index.
For more explanation, Call Beta(L) the firm’s equity beta at the initial level of leverage. Equity betas
reflect both business risk and financial risk. When a firm changes its capital structure (debt/equity
mix), it changes financial risk, and therefore equity beta changes. To recognize the change in financial
risk, we first unleverage beta. This leaves us with business risk. We use the following formula to find
 unleveraged beta, Beta(U) (where D/E is the firm’s current debt-equity ratio):

In which:
D/E ratio is derived from the 2021 bank loans (in short- and long-term) divided by the 2021
total equity = 15,32%
Tc: 2021 tax rate = 21,03%
Then, we re-leverage beta in any particular year using the forecast capital structure for that year
(2022F) (which reintroduces the financial risk associated with that year’s capital structure):

Where:
D/E ratio is the forecast D/E ratio in 2022F-2026F = 11,37%
Tc = 20% (enacted in Circular No 78/2014/TT-BTC)
Cov(RVNI, RGAS) 0,000181
VAR(VNI) 0,0001686
Current Beta 1,071693
Beta(U) 0,956044
Beta(L) 1,042987
Table 1. Calculate Leverred Beta of GAS
- Market Risk Premium = Market Rate of Return - Rf; To simplize the model, we use the two-year
daily of VN Index to calculate the market rate of return by using the average estimation.
- R(VNI) daily = Average historical return on a daily basis in two year from 1/10/2021 to the valuation
date (28/9/2022) = ~0,06%
=> R(VNI) yearly = 252 * R(VNI) daily (the factor 252 is based on the number of trading days of its
stock.) = ~14,06%
Using capital assets pricing model, we can calculate the cost of equity:

=> ke= 14,55%

● Evaluate the intrinsic value through free cash flow to firm (FCFF) model:
To determine the free cash flow to firm in the next 5 years, we first need to forecast these following
criteria: Earnings before interest and taxes (EBIT), Depreciation of Fixed Assets, Capital Expenditures
(CAPEX) and change in net working capital.
- Forecast EBIT
In order to forecast the EBIT, we should follow the Income Statement (Profit or Loss) of the last 5
year from 2017-2021 (Appendix) and forecast some ratio, such as: Revenue growth rate, Profit
margin, Expenses divided by Sales ratio, …
Notes: Expenses performed in the Financial Statement include Selling Expenses and Administrative
Expenses.
Million VND 2017A 2018A 2019A 2020A 2021A Average
Sales 64.522.441 75.611.546 75.005.297 64.134.965 78.992.156
%Sale growth rate 17,19% -0,80% -14,49% 23,17% 6,26%
COGS 49.359.543 58.120.228 58.086.689 52.728.950 65.006.501
Gross profit 15.162.898 17.491.319 16.918.609 11.406.016 13.985.655
Gross margin 23,50% 23,13% 22,56% 17,78% 17,71% 20,94%
Expenses 3.535.410 3.766.611 3.269.641 2.712.210 3.611.655
Expenses/Sales 5,48% 4,98% 4,36% 4,23% 4,57% 4,72%
Financial Revenue 1.272.001 1.476.548 1.664.551 1.451.118 1.186.807
Financial Expense 429.584 616.615 240.940 169.135 402.749
Interest pmt (exp) 280.096 440.018 197.610 101.218 304.139
Interest pmt/
Financial exp 65,20% 71,36% 82,02% 59,84% 75,52% 70,79%
Others 119.007 -41.146 -3.811 13.626 31.887
EBT 12.588.912 14.543.495 15.068.767 9.989.416 11.189.945
Tax 2.650.245 2.831.356 2.982.612 2.006.273 2.353.186
Tax rate 21,05% 19,47% 19,79% 20,08% 21,03% 20,29%
Net income 9.938.667 11.712.139 12.086.156 7.983.143 8.836.759
EPS (VND/share) 5.192,75 6.119,35 6.314,77 4.171,03 4.617,03
Table 2. Calculate historical average ratios from Income Statement.
Besides, we also forecast the future interest payment (interest expense) by the leverage ratio (Total
Debt divided by Total Assets). However, we have adjusted the value of debt by the sum of short-term
and long-term loans (borrowing) and as a result affect to the Total Asset (=Total Equity + short-term
and long-term loans)
Million VND 2017A 2018A 2019A 2020A 2021A Average
Total Assets 52.321.144 51.752.735 52.411.029 52.481.018 60.187.591
% TA Growth rate -1,09% 1,27% 0,13% 14,68% 3,75%
Debt (Bank Loans) 9.049.635 4.885.610 2.796.498 2.981.337 7.994.860
Debt/TA 17,30% 9,44% 5,34% 5,68% 13,28% 10,21%
Interest Pmt (Exp) 280.096 440.019 197.610 101.218 304.139
Interest rate (Rd) 3,10% 9,01% 7,07% 3,40% 3,80% 5,27%
Table 3. Calculate historical average interest rate according to TA and TE
- Adjust some ratios:
After calculating average ratios, we adjusted them in order to be more suitable for the model,
beginning with the sales growth rate (%). According to the 2022 General Meeting of ShareHolder, the
Thi Vai LNG dock warehouse will come into operation in Q4/22 and GAS is expected to start
importing LNG from the end of 2022 or the beginning of 2023, depending on the global market
situation. Besides, as we have studied before, the revenue of a business varies in the same direction
with the selling price of that business’s products. It means that when there is an increase in products’
price will also increase the revenue of that business. Since 2021, the petroleum market has seen
constant volatility, which has led to a two- or even three-fold increase in the price of gasoline. These
are signs that GAS sales will continue to grow in the future. To easily and simply estimate, we project
that revenue will increase at a rate equal to the average growth rate of the previous five years times the
average monthly increase in the price of gasoline in 2022 relative to the same period in 2021.

Time %Growth rate in price compare to the same period in 2021 Average
1/2022 43,56%
2/2022 47,07%
3/2022 56,08%
4/2022 48,92%
5/2022 54,48%
6/2022 61,62%
7/2022 37,84% 45,93%
 8/2022 17,83%
Table 4. Average price index growth rate compared to 2021
Sources: General Statistics Office of Vietnam

Figure 1. Oil price index’s growth rate compared to 2021.

Therefore, the adjusted sale growth rate is equal to (1 + Average Growth rate in price compare to the
same period in 2022) * Average historical sales growth rate from 2017-2022 = 9,14%.

Criteria Average Adjusted

Sale Growth Rate 6,26% 9,14%

Gross Margin 20,94%

Expenses/ Sales 4,72%

Interest Pmt/ Financial Exp 70,79%

Tax rate 20,29% 20% enacted in Circular No 78/2014/TT-BTC

TA Growth rate 3,75%

Debt/TA 10,21%

Rd 5,27%

Table 5. Estimating adjusted ratios

With these ratios, our group has created the forecast EBIT and furthermore the Net Income and EPS of
GAS, under the assumption that the company will not raise any additional equity capital with common
stock.

Million VND 2022F 2023F 2024F 2025F 2026F

Total Assets 62.445.175 64.787.439 67.217.559 69.738.830 72.354.672
Debt (Bank Loans) 6.373.948 6.613.029 6.861.078 7.118.431 7.385.437
Interest Pmt (Exp) 336.125 348.733 361.813 375.385 389.465
Table 6. Forecast interest payment of GAS (2022-2026)
Million VND 2022F 2023F 2024F 2025F 2026F
Sales 86.213.027 94.093.976 102.695.341 112.082.980 122.328.766
COGS 68.163.573 74.394.576 81.195.170 88.617.424 96.718.164
Gross profits 18.049.454 19.699.400 21.500.171 23.465.556 25.610.601
Expenses 4.072.905 4.445.220 4.851.568 5.295.062 5.779.097
Financial Income 1.410.205 1.437.846 1.430.105 1.383.216 1.369.636
Financial Expense 474.835 492.646 511.125 530.296 550.187
Interest pmt (exp) 336.125 348.733 361.813 375.385 389.465
Others 23.913 4.894 14.102 17.684 18.496
EBT 14.935.831 16.204.274 17.581.686 19.041.098 20.669.448
Tax 2.987.166 3.240.855 3.516.337 3.808.220 4.133.890
Net income 11.948.665 12.963.419 14.065.349 15.232.878 16.535.559
EPS (VND/share) 6.242,93 6.773,12 7.348,86 7.958,87 8.639,49
Table 7. Forecast components on Income Statement (2022-2026)
=> Forecast Earnings before Interest and Taxes (EBIT) equal to Earnings before Taxes (EBT) plus
Financial Expenses.

- Forecast Capex and Depreciation:

We also takes advantage of average ratio to interpret the future Capital Expenditures and Depreciation:

Million VND 2017A 2018A 2019A 2020A 2021A Average

Net Fixed Assets 15.395.529 18.609.211 15.849.873 19.773.601 18.098.269
Historical Cost 44.664.816 50.629.583 49.053.324 55.324.453 56.657.692
Capex 2.196.923 711.724 2.691.786 4.200.483 4.927.841
Capex/Sales 3,4049% 0,9413% 3,5888% 6,5494% 6,2384% 4,1446%
Depreciation 2.713.287 2.828.502 2.691.352 2.554.098 3.073.272
Annual
Depreciation rate 6,07% 5,59% 5,49% 4,62% 5,42% 5,44%
Table 8. Calculate Average Capex/Sales and Annual Dep. rate
Million VND 2022F 2023F 2024F 2025F 2026F
Historical Cost 60.230.845 64.130.630 68.386.903 73.032.253 78.102.246
Capex 3.573.154 3.899.784 4.256.273 4.645.350 5.069.993
Depreciation 3.275.218 3.487.280 3.718.726 3.971.330 4.247.025
Table 9. Forecast Capital Expenditures and Depreciation (2022-2026)
- Forecast change in Net working capital:
As we have learned before in corporate finance, Net working capital equals current assets less current
liabilities. Particularly, working capital, when used to determine the value of cash flow for
shareholders, will exclude cash, because it is the most liquid asset. Owners (including creditors and
shareholders) can immediately use this cash to offset related obligations. The cash will be excluded
when discounting cash flows, however, the discounted cash flow value will be included in the cash
part to calculate the final business value.
Also, we use turnover ratio to get the valuation such as:
Receivable Turnover Ratio = Sales / Average Receivables
Inventory Turnover Ratio = COGS / Average Inventories
Payable Turnover Ratio = COGS / Average Payables
Million VND 2017A 2018A 2019A 2020A 2021A Average
Account Receivable 9.174.883 10.213.711 10.358.798 10.239.200 16.920.192
Average Receivable 9.694.297 10.286.254 10.298.999 13.579.696
 Receivable Turnover 7,80 7,29 6,23 5,82 6,78
Inventory 1.645.376 1.948.260 1.574.703 1.662.573 3.241.216
Average Inventory 1.796.818 1.761.481 1.618.638 2.451.894
Inventory Turnover 32,35 32,98 32,58 26,51 31,10
Account Payable 2.324.293 2.663.844 1.913.893 2.676.586 6.630.916
Average Payable 2.494.068 2.288.869 2.295.239 4.653.751
Payable Turnover 23,30 25,38 22,97 13,97 21,41
NWC
(=Rec + Inv - Pay) 8.495.966 9.498.126 10.019.608 9.225.187 13.530.492
CHANGE IN NWC 1.002.160 521.481 -794.421 4.305.305
Table 10. Calculate Average turnover ratios.
For matching the valuation model, there is a need to adjust the rotation’s ratio.
Criteria Average Adjusted

Receivable Turnover Ratio 6,78 6

Inventory Turnover Ratio 31,10 31

Payable Turnover Ratio 21,41 20

Table 11. Estimating adjusted turnover ratios.

Million VND 2021A 2022F 2023F 2024F 2025F 2026F
Account Receivable 16.920.192 11.817.483 19.547.175 14.684.605 22.676.388 18.099.867
Average Receivable 13.579.696 14.368.838 15.682.329 17.115.890 18.680.497 20.388.128
Inventory 3.241.216 1.156.434 3.643.216 1.595.182 4.122.071 2.117.810
Average Inventory 2.451.894 2.198.825 2.399.825 2.619.199 2.858.627 3.119.941
Account Payable 6.630.916 185.441 7.254.017 865.500 7.996.242 1.675.574
Average Payable 4.653.751 3.408.179 3.719.729 4.059.759 4.430.871 4.835.908
NWC
(=Rec + Inv - Pay) 13.530.492 12.788.476 15.936.375 15.414.286 18.802.218 18.542.103
CHANGE IN NWC -742.017 3.147.899 -522.089 3.387.931 -260.115
Table 12. Forecast change in net working capital (2022-2026)
- Calculate Free Cash Flow to Firm:

After forecasting 4 components in the formula, we added them in the table to calculate FCFF:
TERMINAL
Year 2022 2023 2024 2025 2026 VALUE
EBIT 15.271.956 16.553.007 17.943.499 19.416.482 21.058.913
EBIT * (1-Tax
Rate) 12.217.565 13.242.405 14.354.799 15.533.186 16.847.131
(+) Dep 3.275.218 3.487.280 3.718.726 3.971.330 4.247.025
(-) Capex 3.573.154 3.899.784 4.256.273 4.645.350 5.069.993
(-) Chg NWC -742.017 3.147.899 -522.089 3.387.931 -260.115
FCFF 12.661.646 9.682.001 14.339.341 11.471.235 16.284.277 250.312.000
Table 13. Interpreting Free Cash flow to firm and terminal value (2022-2026)
Notes: Tax rate = 20%
- Estimate Intrinsic Value per share:
 Where:
WACC: Weighted Average Cost of Capital = We*Ke + Wd*Rd*(1-T)
g: is the assumed value for the steady (terminal) growth rate. We assume in the spreadsheet that g =
6,56%, roughly in line with the long-run growth rate of the broad economy, Vietnam GDP Growth
rate.

Figure 2. Annual GDP growth rate (1981-2021)

Weighted Average Cost of Capital 13,49%

Cost of Equity (Ke) 14,55%
Cost of Debt (Kd) 4,22%
Interest rate (Rd) 5,27%
Tax rate (T) 20%
Wd 10,21%
We 89,79%
Table 14. WACC calculation.
=> Firm Value = 176.982.712.509.038 VND
Equity value, commonly referred to as the market value of equity or market capitalization, can be
defined as the total value of the company that is attributable to equity investors. It is calculated by
multiplying a company’s share price by its number of shares outstanding. Alternatively, it can be
derived by starting with the company’s enterprise value. In detail, to calculate equity value from
enterprise value, subtract debt and debt equivalents (total bank loans in short- and long-term), non-
controlling interest and preferred stock, and add cash and cash equivalents. Equity value is concerned
with what is available to equity shareholders. Debt and debt equivalents, non-controlling interest, and
preferred stock are subtracted as these items represent the share of other shareholders. Cash and cash
equivalents are added as any cash left after paying off other shareholders are available to equity
 shareholders.

Enterprise Value 176.982.712.509.038

(-) Preferred Stock 0
(-) Non-controlling Interest 1.098.473.302.817
(+) Cash & Cash Equivalent 5.300.330.735.432
(-) Debt (Bank Loans) 7.994.860.451.721
Equity value 173.189.709.489.932
Equity value/Share 90.488,11
Table 15. Equity value per share’s calculation.
● Evaluate the intrinsic value through P/E model:
Computing the intrinsic value of GAS stock by P/E method is to forecast 2022’s EPS and the 2022’s
Price-to-earnings ratio.
Intrinsic Value = EPS 2022 * P/E 2022
We have already had the forecasting EPS in 2022 through FCFF Valuation part (shown in the below
part). All that remains is to find a way to forecast the P/E of GAS stocks in 2022.

Also, as having studied in chapter 18:

where:
1 - b = d: Dividend Payout Ratio
g = ROE * b: Dividend growth rate in long-term
k: Cost of Equity
Therefore, to forecast P/E in 2022, we need to estimate 3 future indexes: k, g and d respectively.
- Forecast cost of equity by using CAPM in the previous part. k = 14,55%
- Forecast dividend growth rate (g):
First, we have to compute the historical P/E from 2017-2021, simply by dividing the market closing
price of GAS stock (historical price) to EPS of that year.
VND 2017 2018 2019 2020 2021
Market Price 97.400 86.600 93.700 81.720 93.646
Earning Per Share
(EPS) 5.192,75 6.119,35 6.314,77 4.171,03 4.617,03
P/E 18,757 14,152 14,838 19,592 20,283
Table 16. Historical price-to-earning ratio Caculation
From the equation P/E ratio = d/(k-g), our group derived the historical growth rate in the period from
2017-2021, after that inferred the future constant growth rate by adjusting the average value of g.
2017 2018 2019 2020 2021 Average Adjust
Growth rate 10,44% 8,43% 9,74% 10,88% 11,34% 10,17% 12,5%
Table 17. Adjusted Dividend growth rate Estimation
- Forecast dividend payout ratio (d):
Using 2 following equation to interpret the 2022 payout ratio:
(1) d = 1 - b
 (2) g = b * ROE
VND 2022F
Net Income 11.948.665.143.257
Total Equity 56.071.227.009.110
ROE 21,31%
g (remain unchanged since 2022) 12,5%
Plowback ratio (b) 41%
Payout ratio (d) 59%
Table 18. Forecasting payout ratio
=> P/E ratio = d/(k-g) = 41%/(14,55%-12,5%) = 20,201
=> Intrinsic Value = 2022’s P/E ratio * 2022’s EPS = 20,201 * 6.242,93 = 126.111,2 VND
APPENDIX
BALANCE SHEET
Unit: Million VND
ITEMS 2017 2018 2019 2020 2021
TOTAL ASSETS 61.889.343 62.614.420 62.178.787 63.208.401 78.768.075
CURRENT ASSETS 38.256.958 40.932.013 41.815.397 39.472.227 51.394.724
Cash and cash equivalents 13.502.017 6.705.645 4.475.889 5.237.247 5.300.331
Cash 1.729.822 1.330.220 1.151.996 1.323.144 1.395.850
Cash equivalents 11.772.195 5.375.425 3.323.893 3.914.103 3.904.481
Net worth of short-term investment 13.577.350 21.602.454 24.915.000 21.613.236 24.799.826
Short-term investment 0 0 0 0 0
Provision for short-term investment 0 0 0 0 0
Held-to-maturity investment securities 13.577.350 21.602.454 24.915.000 21.613.236 24.799.826
Accounts receivable 9.174.883 10.213.711 10.358.798 10.239.200 16.920.192
Accounts receivable from customers 4.939.925 4.638.182 4.683.940 5.579.799 10.598.393
Advances to suppliers 155.520 91.011 844.110 435.276 413.405
Internal receivables 0 0 0 0 0
Construction receivables 0 0 0 0 0
Short-term loan receivables 0 0 0 0 0
Other receivables 4.344.162 5.773.843 5.142.871 4.620.069 6.600.033
Provision for doubtful debts -265.538 -290.003 -312.833 -395.944 -691.639
Shortage of assets waiting for resolution 815 677 710 0 0
Net inventory 1.645.376 1.948.260 1.574.703 1.662.573 3.241.216
Inventories 1.737.552 2.018.155 1.645.289 1.729.147 3.324.678
Provision for obsolete inventories -92.177 -69.895 -70.587 -66.574 -83.461
Other current assets 357.332 461.943 491.007 719.972 1.133.159
Short-term prepaid 83.899 103.519 89.084 57.559 70.496
VAT 222.926 299.938 367.883 609.334 1.011.376
Other taxes 50.507 58.486 34.040 53.079 51.287
Government bonds trading 0 0 0 0 0
Other current assets 0 0 0 0 0
NON-CURRENT ASSETS 23.632.385 21.682.408 20.363.391 23.736.174 27.373.351
Non-current receivables 188.769 216.829 127.884 162.062 187.719
Non-current trade-receivables 0 0 0 0 0
Long-term advance to suppliers 62.323 67.562 79.220 73.910 70.338
Paid-in capital in wholly-owned
subsidiaries 0 0 0 0 0
Long-term internal receivables 0 0 0 0 0
Non-current lending principal receivables 0 0 0 0 0
Other long-term receivables 126.446 149.267 48.664 88.152 117.380
Provision for doubtful long-term
receivables 0 0 0 0 0
Fixed assets 15.395.529 18.609.211 15.849.873 19.773.601 18.098.269
Net tangible fixed assets 14.924.790 18.149.000 15.437.766 19.335.106 17.688.043
Cost of tangible fixed assets 44.056.506 50.029.678 48.513.599 54.739.218 56.069.460
Accumulated depreciation -29.131.716 -31.880.678 -33.075.833 -35.404.113 -38.381.417
Net leased fixed assets 36.764 20.024 0 0 0
Leased fixed asset costs 86.944 49.179 0 0 0
Accumulated depreciation -50.180 -29.155 0 0 0
Net intangible fixed assets 433.976 440.186 412.107 438.495 410.226
Intangible fixed asset costs 521.366 550.726 539.725 585.235 588.232
Accumulated amortisation -87.390 -110.540 -127.618 -146.739 -178.006
Investment properties 24.843 24.015 23.187 22.358 21.935
Cost of investment properties 26.428 26.428 26.428 26.428 26.428
Accumulated depreciation -1.585 -2.413 -3.241 -4.070 -4.493
Long term assets in progress 6.571.784 1.235.198 3.020.872 2.302.959 4.871.054
Long term work-in-progress 0 0 0 0 0
Long term construction in progress 0 0 0 0 0
Long-term investments 92.633 63.020 404.694 379.190 400.162
Investments in subsidiaries 0 0 0 0 0
Investments in associates 56.593 53.020 394.694 369.190 390.162
Other long-term investments 111.040 85.000 35.000 35.000 35.000
Provision for obsolete long-term
investment -75.000 -75.000 -25.000 -25.000 -25.000
Held-to-maturity investments 0 0 0 0 0
Other long-term assets 1.358.828 1.534.135 936.881 1.096.004 3.794.212
Long-term prepaid 1.077.254 1.324.486 823.187 1.022.823 3.744.293
Deferred tax receivables 46.142 43.975 30.490 50.809 49.281
Long-term tools, supplies and spart parts 0 0 0 0 0
Other long-term assets 0 0 0 0 0
Goodwill 0 0 0 0 0
LIABILITIES 18.617.835 15.747.295 12.564.256 13.708.720 26.575.344
Current liabilities 10.911.814 11.846.614 9.964.436 9.748.781 16.561.262
Trade payables 2.324.293 2.663.844 1.913.893 2.676.586 6.630.916
Advances from customers 204.413 237.513 202.837 228.059 104.817
Statutory obligations 1.120.506 759.701 876.865 553.509 555.129
Payables to employees 174.977 188.077 118.098 199.352 296.411
Accrued expenses 4.428.629 5.488.546 4.047.845 3.767.918 3.858.407
Internal payables 0 0 0 0 0
Construction contract payables 0 0 0 0 0
Short-term unearned revenues 9.401 1.481 937 77.365 2.586.889
Other payables 676.948 658.390 1.029.192 749.208 1.470.760
Short-term loan 1.737.699 1.489.867 1.340.568 1.017.470 484.740
Short-term provision 0 0 9.050 0 0
Bonus and welfare fund 234.948 359.194 425.151 479.314 573.193
Price stabilisation fund 0 0 0 0 0
Trading of government bonds 0 0 0 0 0
Non-current liabilities 7.706.021 3.900.681 2.599.820 3.959.939 10.014.082
Long-term suppliers payables 0 0 0 0 0
Long-term advances from customers 0 0 0 0 0
Long-term accrued expenses 0 0 0 0 0
Long-term internal payables of capital 0 0 0 0 0
Long-term internal payables 0 0 0 0 0
Unearned revenues 24.193 23.329 22.465 21.601 21.601
Other long-term liabilities 208.266 247.138 86.942 93.021 114.047
Long-term loans 7.311.936 3.395.743 1.455.930 1.963.867 7.510.120
Convertible bonds 0 0 0 0 0
Preference shares 0 0 0 0 0
Deferred tax liabilities 117.753 168.504 182.000 171.628 219.008
Severance allowance reserve 0 0 0 0 0
Provision for long-term liabilities 23.526 45.337 836.652 1.700.127 2.145.620
Scientific and technological development
fund 20.347 20.631 15.831 9.695 3.687
EQUITY 43.271.509 46.867.125 49.614.531 49.499.681 52.192.731
Equity and funds 43.271.509 46.867.125 49.614.531 49.499.681 52.192.731
Share capital 19.139.500 19.139.500 19.139.500 19.139.500 19.139.500
Common stock 19.139.500 19.139.500 19.139.500 19.139.500 19.139.500
Preference shares 0 0 0 0 0
Share premium 189.747 210.680 0 0 0
Convertible bond options 0 0 210.680 210.680 210.680
Other capital 255.319 255.319 196.659 196.659 196.659
Treasury shares -40.111 0 0 0 0
Asset revaluation reserve 0 0 0 0 0
Foreign exchange differences reserve 0 0 0 0 0
Investment and development fund 14.849.894 14.862.130 18.844.380 18.853.827 21.053.840
Enterprise re-organisation support fund 0 0 0 0 0
Fund financial reserve 0 0 0 0 0
Other funds 6.287 6.287 6.287 6.287 6.287
Undistributed earnings 7.089.032 10.598.838 10.109.461 10.028.673 10.487.292
Undistributed earnings/Accumulated
losses up to prior year-end 1.353.669 3.110.218 59.909 2.319.480 1.959.967
Net profit/loss after tax this period 5.735.363 7.488.621 10.049.553 7.709.193 8.527.326
Non-controlling interests 1.781.841 1.794.371 1.107.565 1.064.055 1.098.473
State budget and other funds 0 0 0 0 0
Welfare and reward fund (before 2010) 0 0 0 0 0
State budget 0 0 0 0 0
Funds that form of fixed assets 0 0 0 0 0
Minority Interest 0 0 0 0 0
TOTAL LIABILITIES AND EQUITY 61.889.343 62.614.420 62.178.787 63.208.401 78.768.075

P&L STATEMENT
Unit: Million VND

ITEMS 2017 2018 2019 2020 2021

Revenue 64.830.158 75.976.346 75.310.107 64.134.965 78.992.156
Deductions -307.717 -364.799 -304.809 0 0
Net revenue 64.522.441 75.611.546 75.005.297 64.134.965 78.992.156
COGS -49.359.543 -58.120.228 -58.086.689 -52.728.950 -65.006.501
Gross profit 15.162.898 17.491.319 16.918.609 11.406.016 13.985.655
Finance income 1.272.001 1.476.548 1.664.551 1.451.118 1.186.807
Finance expenses -429.584 -616.615 -240.940 -169.135 -402.749
- In which: Interest
expense -280.096 -440.018 -197.610 -101.218 -304.139
Profit/(loss) from joint
venture company -874 -3.573 -505 -11.351 15.053
Selling expenses -2.426.235 -2.638.679 -2.394.375 -1.943.005 -2.132.583
General and
administrative expenses -1.109.175 -1.127.932 -875.266 -769.205 -1.479.072
Operating profit/(loss) 12.469.031 14.581.068 15.072.074 9.964.438 11.173.111
Other income 163.296 39.089 16.104 50.448 83.103
Other expenses -44.289 -80.235 -19.915 -36.822 -51.216
Other net income 119.007 -41.146 -3.811 13.626 31.887
Profit/(loss) from joint
venture company (from
2015) 0 0 0 0 0
Net profit/(loss) before
taxes 12.588.038 14.539.922 15.068.263 9.978.064 11.204.998

Income taxes-current -2.618.775 -2.778.439 -2.967.382 -2.037.319 -2.304.278

Income taxes – deferred -31.470 -52.917 -15.230 31.046 -48.908

Income tax expenses -2.650.245 -2.831.356 -2.982.612 -2.006.273 -2.353.186
Net profit/(loss) after
taxes 9.937.793 11.708.565 12.085.651 7.971.791 8.851.812

Minority Interest 252.929 254.597 183.403 116.835 178.847

Shareholders’ profit of
parent company 9.684.864 11.453.969 11.902.248 7.854.956 8.672.965

CASHFLOW STATEMENT
Unit: Million VND
ITEMS 2017 2018 2019 2020 2021
Net cash from
operating activities 14.385.550 12.421.888 12.680.918 7.330.399 7.594.821
Profit/(loss) before
changes in working
capital 14.432.298 16.540.817 17.191.578 12.269.263 14.083.883
Profit before taxes 12.588.038 14.539.922 15.068.263 9.978.064 11.204.998
Depreciation of fixed
assets 2.713.287 2.828.502 2.691.352 2.554.098 3.073.272
Allocation of
goodwill 0 0 0 0 0
Provisions expense 98.854 23.995 836.352 933.524 738.512
Profit/(loss) on
unearning exchange
rate differences -23.436 106.171 -17.215 18.570 -128.144
Profit/(loss) proceeds
from disposal of fixed
assets 0 0 0 0 0
Profit/(loss) on
investing activities -1.224.540 -1.400.877 -1.584.783 -1.316.212 -1.108.893
Interest expenses 280.096 440.018 197.610 101.218 304.139
Earning interest and
dividends 0 0 0 0 0
Other adjustments 0 3.086 0 0 0
(Increase)/decrease
in accounts
receivable 2.711.910 -1.147.990 -702.159 -960.720 -7.153.186
(Increase)/decrease
in inventories -357.953 -280.603 277.061 -83.857 -1.612.418
Increase/(decrease)
in accounts payable 951.119 1.525.692 -401.099 -192.157 7.800.920
Increase/(decrease)
in prepaid expenses -146.973 -266.852 -142.272 -168.110 -2.740.310
(Increase)/decrease
in trading securities 0 0 0 0 0
Paid interests -301.821 -447.432 -275.509 -95.440 -262.442
Paid enterprise -2.399.908 -3.112.740 -2.853.006 -2.090.390 -2.274.967
income tax
Other proceeds from
operating activities 13.084 1.102 0 0 0
Other expenditures
on operating
activities -516.206 -390.107 -413.676 -1.348.190 -246.658
Net cash flows from
operating activities -8.691.210 -7.314.509 -4.722.133 99.125 -6.755.056
Expenditures on
purchase fixed assets
and long-term assets -2.179.626 -692.464 -2.690.311 -4.173.690 -4.747.173
proceeds from
disposal of fixed
assets 17.297 19.260 1.475 26.793 180.668
Expenditures on
loans and purchase of
debt instruments -15.003.900 -18.707.004 -37.350.400 -29.153.946 -41.510.884
Proceeds from
lending or repurchase
of debt instruments 7.325.000 10.681.900 34.030.200 31.865.500 38.324.295
Expenditures on
equity investments in
other entities 0 0 0 0 0
Proceeds from equity
investment in other
entities 24.753 25.422 1.470.288 0 0
Proceeds from
interests, dividends
and distributed
profits 1.125.266 1.358.376 -183.385 1.534.467 998.038
Cash flows from
financial activities -5.728.942 -11.905.051 -10.188.116 -6.668.268 -774.267
Proceeds from
issuance of shares
and receipt of
contributed capital 0 60.952 0 0 0
Repayment of
contributed capital
and repurchase of
stock 0 0 0 0 0
Proceeds from
borrowings 10.466.012 2.524.748 2.344.153 2.201.825 6.246.928
Repayment of
principal -8.910.736 -6.822.152 -4.294.385 -2.020.031 -1.156.322
Repayment of
financial principal -19.652 -12.799 -7.900 0 0
Dividends paid to
owners -7.264.566 -7.655.800 -8.229.985 -6.850.062 -5.864.873
Interest received 0 0 0 0 0
Net cash flows during -34.602 -6.797.672 -2.229.332 761.256 65.498
period
Cash and cash
equivalents at the
beginning of period 13.537.561 13.502.017 6.705.645 4.475.889 5.237.247
Effect of exchange
rate -942 1.300 -425 101 -2.414
cash and cash
equivalents at the end
of period 13.502.017 6.705.645 4.475.889 5.237.247 5.300.331

5. Compare the price you estimate and market price in order to make a decision on
buying/selling/holding the stock.

Based on the results of the assessments, in the short term, we recommend HOLD for GAS stock. The
current price on September 28, 2022 for the stock ticker GAS is VND 104,000, while our calculated
actual valuation (108,300 VND) is undervalued. Our valuation relies on two critical valuation
methodologies -FCFF and P/E, with a respective weight of 50% and 50% in our terminal price.

Meanwhile, for the long-term view, we recommend BUY for GAS stock, with a 1-year target of VND
128,000/share, corresponding to a potential upside of 23%. This assessment is based on the assessment
of 7 securities companies (Vndirect, Ban Viet, Phu Hung, SSI, Mirae Asset, Maybank Kim Eng,
HCMC) about the target price of GAS stock in the next 12 months in the past 3 months.

Specifically, SSI uses both discounted Cash Flow to Company (FCFF) and Cash Flow to Equity
(FCFE) methods with a weight of 1:1, representing a balanced view of the benefits to shareholders and
internal to the company. Their estimate is based on the assumption that Brent oil prices will be 95
USD/barrel in 2022 and 85 USD/barrel in 2023. In 2023, they estimate GAS will record a slight
decrease in business results, specifically forecast profit. forecast to decrease 5.1% y/y, mainly due to
lower oil prices in 2023. However, they believe GAS will see an increase in gas output (up 10% y/y).
Other factors impacting their recommendation are lower-than-estimated dry gas production and fuel
prices.