Sector: Industry | Construction & Building Materials

PVX PetroVietnam Construction Joint-stock Corporation The Companys share is priced at 35,700 VND/ share.
OVERVIEW Revenue and profit from construction activities increase sharply: PVXs average revenue from 2007-2009 increases 128% and profit about 230% per year. In 2010, it is estimated that revenue increases 72% and profit about 157%. We assess that PVX will achieve its revenue target. PVX is the biggest construction company specialized in gas and oil industry in Vietnam: Due to the nature of Petroleum industry, the Corporation is the EPC general contractor for huge works of petroleum industry such as: Ca Mau Gas-Electrical-Protein project, LPG storage, manufacturing rig base, Vung Ang Thermal Power ... The average investment rate for infrastructure of oil and gas industry is from 16,000 to 20,000 billion VND per year, which will create great opportunities for PVX to dominate completely the construction and installation service segment in the industry and increase revenue, profit in the coming time. Potentials from big real estate projects: Beside the traditional activities, PVX is now the investor as well as the indirect investor through its subsidiaries, associates in many real estate projects such as Hoai Duc Petroleum Urban Area - Ha Noi (190ha), Petroleum University Area - Vinh Phuc (72ha), My Dinh 5-star hotel complex Ha Noi (3.82 ha), Vung Tau Petroleum urban area (69.4 ha), Tan Vien eco-tourism area - Ha Noi (1,024ha), Ha Long eco-tourism area (1,024ha) ... Valuation: PVX Stocks are priced based on four methods FCFE, FCFF, P/E and P/B. The price is determined at around 35,700 VND/share. This price is equivalent to P/E in 2010 at about 8.36 times; this P/E is relatively attractive compared to other companies operating in the same sector in Vietnam and Southeast Asia.
RECOMMENDATION: BUY Expected price: Transaction price: 52 week high: 52 week low: STOCK DATA Market: Par value: No of shares: Market cap (bil VND): EPS 2009 (VND) HNX 10,000 250,000,000 7,500 1,383 35,700 23,700 34,130 15,400

OWNERSHIP INFORMATION PVN Loc Viet Fund Management JSC PVFC Others 41.21% 4.16% 3.74% 50.89%

KEY FINANCIAL FIGURES 2007 Revenue (mil VND) Gross profit (mil VND) Profit after tax (mil VND) Owners equity (mil VND) ROA ROE EPS (VND) 726,816 36,106 17,799 1,500,000 2.09% 9.87% 1,187 2008 1,808,500 170,377 82,020 1,500,000 2.29% 5.43% 1,272 YoY 148.8% 371.8% 360.8% 0% 9.5% -44.9% 7.2% 2009 4,072,114 418,497 207,519 1,500,000 4.05% 13.04% 1,383 YoY 125.4% 145.6% 153.0% 0% 76.8% 140.1% 8.7% 1H/2010 2,828,812 359,089 370,345 2,500,000 5.85% 14.04% 2.416 HoH 99.5% 178.9% 520% 66% 431% 401% 507%

Source: PVX

Plea se read the discla i mers a t the end of this repo rt

Stock a nalysis repo rt -PVX

INVESTMENT POSITIVES We believe that PVX is one of biggest Construction Corporation in Vietnam in the near future. PVX is a huge barrier for competitors to join the construction and installation field of oil and gas industry, thanks to the advantages from PVN, most construction and installation works which PVN has participated in will be designated to PVX. With 27 year experience in operations, PVX is the oldest and biggest construction and installation company in Vietnams oil and gas industry. PVX has involved in most of the major oil and gas projects which are deployed by PVN. At the speed of new mine development and plan for local & international investment of PVN, the annual expenditure for construction works is at around VND 16,000 to 20,000 billion, PVX will have a lot of opportunities to expand business activities, increase sales and profits in the future. During the period from 2005-2009, the average revenue growing rate reached 152% per year and profit growing rate is 277% per year. PVX has the fastest growing rate in construction sector in Vietnam. The expansion of EPC activities to projects such as power plants, hydropower, industrial production and construction of oil refineries, the growth rate of PVX will sharply increase and achieve 30% per year up to 2015. Beside the traditional activities, PVX has expanded a lot to industrial production, mechanical engineering, real estate business. A large number of projects marking a turning point of PVX are in deployment processes such as Tien Giang oil and gas industrial park project (over 1,220 ha), Petroleum Steel Pipe production project (invested capital: 1,490 billion VND), Hoai Duc Petroleum urban area - Ha Noi (190ha), Petroleum University project (72ha), the financial center project, My Dinh Hotel (3.82 ha), Vung Tau Petroleum urban area (69.4 hectares), Tan Vien eco-tourism zone (1.024 ha), urban ecology area in the west of Ha Long (1,130 hectares) INVESTMENT RISKS Risks on implementing projects to expand business activities: Currently most of PVXs projects are being implemented and in research process. But most of them were delayed, some have started but are still facing with land clearance problems, which will affect the revenue, profit plan and the Corporation may not achieve the target. The concern is mainly due to process of site clearance compensation, land recovery in Vietnam and particularly it is very slowly in the northern region. Risks of construction capacity: In terms of turnover scale in construction industry, PVX is one of the 10 companies having biggest revenues in Vietnam; However, most revenue comes from the projects PVX is designated as a contractor by Vietnam National Oil & Gas Group, so there are concerns about the PVXs competitiveness

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Stock a naly sis repo rt -PVX when the scale construction of PVX increased to certain level, the construction works within the Group do not grow in line with PVX scale, then, PVX will have to compete with other units outside the Group and the competition is more fierce. REVIEW BUSINESS PERFORMANCES General Overview of PetroVietnam Construction Joint Stock Corporation (PVX): PVX, previously known as United Petroleum Construction enterprise established in 1983, the enterprise changed its name to PetroVietnam Design and Construction Company (PVECC) in 1995, and then the Company was changed to PetroVietnam Construction Joint Stock Corporation with the charter capital of 150 billion VND in 2005. Since 2007, the Corporation operates under the parent subsidiary company model in which the parent company is PetroVietnam Construction Corporation (PVX) formed on the basis of conversion and reorganization of the companies with PVNs capital contribution. In 2008, PVX increased its capital from 150 billion VND to 1,500 billion VND, and increased to 2,500 billion VND in 2010. Main business activities of PVX are: construction, mechanical engineering, producing materials for construction, infrastructure, real estate and financial investment. Business activities of the Company: Construction activities often contribute over 90% of the total revenue structure of PVX, in which mainly from the companies within PVN. PVXs revenue is expected to increase rapidly in the coming years when industrial production and real estate business were strongly invested in order to shift the revenue structure in 2015. Graph 1, 2: Revenue structure
Re ve nu e st r uct ure of 2 00 9 Exp ecte d Re ve nu e st r uct ure up t o 2 01 5

Source: PVX Construction activities of PVX grow rapidly in the future. PVX currently has a lot of ongoing construction projects, which mainly come from the companies within PVN. Revenue structure from construction accounts for 80% of the www.psi.vn | resea rch@psi.vn

Stock a naly sis repo rt -PVX revenue structure. Construction revenue in petroleum industry accounts for 34% of total construction revenue, industrial construction accounts for 20% and civil construction is 46%. Revenue structure from construction activities will gradually change when PVX become main contractors, general contractors for the EPC projects. During the period 2010-2015, PVX will rapidly change the revenue structure. Up to 2015, revenue from petroleum offshore construction accounts for 15% of total revenue structure, equivalent to approximately 5,250 billion VND. Revenue from construction of refinery plants & petroleum factories accounts for 20% of total construction revenue, equivalent to approximately 7,000 billion VND. Revenue from constructing storage system, transporting petroleum products accounts for 10% of total revenue, equivalent to VND 3,500 billion. Graph 3, 4: Revenue structure of construction activities
Outp ut v al u e of PVCs c on str ucti on i n 2 00 8 Pl an f or st ru ct u re of PVCs acti vi ti e s i n 2 00 8

So urce: PVX PVX is also one of three largest EPC contractors in Vietnam together with Song Da holdings and Vietnam Machinery Erection Corporation (Lilama), which will help PVX improve the capacity of design and construction of larger projects in Vietnam as well as in the region in the future. Together with the enhanced design works and construction capacity, PVX is striving to become one of the largest EPC contractors in Vietnam in the near future, particularly in offshore oil & gas construction projects and petrochemical refineries, chemical production, power plants, oil storage and pipeline ... Currently, PVX has signed large contracts with the construction value of more than VND 12,500 billion. These contracts have been implemented in the 2008-2011 period and a series of new investment projects from the Group, in which PVX will be the main contractor are going to be deployed based on the implementation progress of other PVXs members.

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Stock a nalysis repo rt -PVX Table 1: Some major construction projects, PVX have deployed in recent years and 2010
No 1 2 3 4 5 6 7 8 9 10 11 12 P roj ects Pol yp r op yl en e EP C Pl ast i c Pl ant Dun g Quat Cu Lao Ta o Pet r ol eu m st ora g e Le ve l i ng t h e i n frast ru ct u r e of N ghi S on Refi n er y Pet r ol eu m In st i t ut e Ngh e An P et r ol eu m Bui l d i ng Ph u M y Hu n g P et rol eu m fi nan c e t rad e cent er pro j ect Th ai Bi n h 2 t h e rmal pow er l e vel i n g si t e, r oa ds i n t he pr oj ect Nhon Tr ach 2 c ombi n ed c ycl e po wer pl ant pr oj e c t Di nh Vu synt h et i c p ol ye st er fa ct or y Int eri or Mi n i st r y h eadq uart er bu i l di n g Nort h et h an ol bi o fuel s pl an t Vun g An g 1 Th e rmal Po wer A mou nt (b i l VND) 55 7, 0 00 35 1, 8 52 34 5, 5 60 80 9, 0 68 45 1, 6 98 57 0, 0 00 38 3, 3 09 1 , 27 7, 9 75 1 , 10 3, 8 50 39 5, 0 58 1 , 17 1, 7 05 1 , 90 0, 0 00

Source: PVX, PSI Research Assessing new investment situation in the petroleum industry With its strategy considering Vietnam National Oil & Gas Corporation as a central for the development, PVX is associated with the orientation and the development of the PVN. Currently, PVN are deploying a large number of investment projects in many fields such as petrochemical, fertilizer production, textiles, electrical, mechanical manufacturing, transportation, real estate, ... the list of investment projects up to nearly 70 billion dollars, which are the main market for PVX to develop strongly in the future. Table2: List of major projects that PVN plans to invest in the near future
No Pr oj e cts A mou nt ( mi l US D) I mpl e me nt ati on p r og res s 20 11 20 12 20 13 20 14 Impl e men t i n g 20 09 -20 11 Oper at i on i n 2 01 4

Pr oj ect t o ex p an d th e d ep l oy me nt of oi l & g as 1 C hi m S a o, Lan D o, Di amond , Hai Su Den , Hai S u Tran g, wh i t e rhi n ocer os mi ne 2 Whi t e Leo pard, Whi t e Li on , Hai Th ach - Ju pi t er 3 S u Tu N au, Th an g Lon g, Ki m Lon g, Ca V oi , A c Qu y Mi n e 4 Don g D o, Th i en Un g Mi n e 5 B l oc k B -O Mon gas pi pel i ne 6 S ou t h C on S on 2 ga s pi p el i ne 7 P i pel i n e c onn ect i n g East - S out h We st Petr oc he mi cal , pr oc es si ng a nd oi l tr e at men t, b i of uel s p r oje ct s. 1 Du ng Qu at re fi ner y pl ant

1 , 00 0

2 5, 0 08 , 2 3 , 05 3 Fi n i sh ed st a ge 1 , i mpl e men t i ng su p port i n g wor k s Impl e men t fr om 2 01 1 -20 16 Impl e men t fr om 2 01 6 - 2 02 0 Impl e men t fr om 2 00 8 -20 14 Fi n i sh ed 5 0% o f con st ruct i on vo l u me, est i mat ed t o op erat e i n 2 01 2 Fi n i sh ed pr e-F S pr oj ect , i mpl e men t i ng fr om 2 01 0 -2 01 6 Desi gni n g 1 / 50 0,

2 3 4 5

Du ng Qu at e xpan si on r e fi ner y pl ant Lon g S on oi l re fi n er y (r efi n er y pl an t N o. 3 ) Nghi S on re fi n er y pl ant (re fi ner y N o 2) C a Mau P rot ei n pl ant

1 , 15 9 7, 0 00 8 , 00 0 6 , 00 0 9 00 , 2

6 7

Du ng Qu at u nd er gr ou nd oi l rep osi t or y Lon g S on un der gr oun d oi l re po si t or y

34 0 31 0

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Stock a nalysis repo rt -PVX

8 9 10 11 12 13 14 Nghi S on u nd er gr ou nd oi l re posi t or y Vu ng D o oi l u nd er gr oun d st ora ge P hu Th o bi ofu el pl ant Di n h Vu P ol yest er fi ber pl an t Hai P hon g Qu an g N gai bi ofu el pl an t B i nh Ph uoc bi ofu el pl ant S ou t h ern pet r och e mi cal c ompl ex 30 0 40 0 60 32 5 80 81 4 , 00 0 i mpl e men t i ng fr om 2 00 9 -2 01 5 Fi n i sh ed P re-FS pr oj e ct , Impl e men t i n g fr om 2 01 0 -2 01 6 Fi n i sh ed P re-FS pr oj e ct , Impl e men t i n g fr om 2 01 0 -2 01 6 Impl e men t i n g fr om 2 00 9 -2 01 2 Impl e men t i n g fr om 2 00 9 -2 01 2 Impl e men t i n g fr om 2 00 9 -2 01 2 Impl e men t i n g fr om 2 01 0 -2 01 2 Impl e men t i n g fr om 2 00 9 20 14 , In Lon g S on -Vun g Tau i nd ust ri al zon e Impl e men t i n g fr om 2 01 0 -2 01 2 Impl e men t i n g fr om 2 00 9 -2 01 1 Impl e men t i n g fr om 6 / 20 09 Impl e men t i n g fr om 2 01 1 Impl e men t i n g Impl e men t i n g Impl e men t i n g Impl e men t i n g Impl e men t i n g Impl e men t i n g Impl e men t i n g fr om fr om fr om fr om fr om fr om fr om 2 01 1 2 01 0 2 01 0 2 01 1 3 / 20 08 2 01 0 2 01 0

15 F SO fl o at i ng w ar eh ous e i n P OC East Sea El ect ri c Pr oj ect s 1 Nh on Tr a ch 2 Ther mal pow er 2 Vu ng An g 1 Th er mal pow er pl ant 3 Qu an g Tr ach 1 - Quan g Bi n h t h er mal pow er pl ant 4 Luan g Pr a ban g h yd r o p ow er pl an t 5 Thai Bi n h 2 t hermal po wer pl ant 6 Lon g P hu 1 Soc Tr an g Th er mal p ower pl an t 7 S on g Hau 1 t h ermal p ow er pl ant 8 Hu a Na h yd r o p owe r pl an t 9 Da kdri n g h yd r o p ow er pl an t 10 P hu Qu y el ect ri c pl an t P ort Proj e ct 1 P hu oc An port 2 P V TRA NS In t ern at i on al port 3 Hon La- Qu an g Bi nh Port 4 Nghi S on - Th an h Hoa P ort

35 0 10 , 80 8 70 0 1 , 58 8 1 , 50 0 1 , 80 0 1 , 66 9 1 , 46 3 1 70 8 23 0 15 0 9 33 , 2 8 46 , 6 37 , 3 21 , 2 28 , 1

Impl e men t i n g fr om 2 01 0 -2 01 2 Impl e men t i n g fr om 2 01 1 -2 01 5 Expand i n g t he p ort , pha se 2 an d e x pect ed t o fi n i sh i n 20 10 op erat i n g 1 50 % c a paci t y and i nt end t o ex pan d

Re al est at e p r oje cts (me nti one d i n re al est at e re vi e w)

Source: PVN, PSI research Beside construction activities in the petroleum industry, PVXs members also participated in construction activities outside the industry. The civil and industrial construction sector now account for 60% of total construction revenue structure; However, construction activities specialized in petroleum industry will increase rapidly in the near future, therefore the proportion of construction and installation specialized oil and gas industry will increase in the coming years, at least up to 2015. This enables PVX to improve gross profit margin significantly thanks to specialized construction activities, industrial installation and the profit margin is often over 10% compared to gross profit margin from civil construction activities around 7-8%. Residential construction activities result from projects developing real estate, in which PVXs member companies are investors, as well as the member companies participate in joint venture, capital contribution and participation for bidding. However, the bidding for participation of civil construction works will not occur strongly at least until 2015 due to the fact that the projects of PVN and its member companies are large enough for PVX and its member units to work for a long time.

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Stock a nalysis repo rt -PVX Assessin g Vietna m s constru ction market In recent years, Vietnam construction industry contributes significantly to the economic growth, output value of construction is estimated at nearly USD 6 billion in 2009, representing approximately 5.2% of the total GDP of Vietnam. Although the industry scale in GDP is not much but has created momentum for development in the industry such as real estate, producing building materials, basic materials as well as all for other sectors when there is a need to expand production. The growth rate of the industry is very high at over 10% per year for the past time and in the future. They are the favorable conditions for the Company to develop in the future. Growth speed of the construction industry depends on the growth rate of total social investment, fluctuations in raw material prices and the real estate market. In recent years, both local and international investment has strongly grown with the average rate of 6% per year, investment often accounts for 34% of annual GDP. In 2010, the estimated growth rate is about 3% equivalent to 624,392 billion VND, total construction value of about 125,500 billion VND, growing rate of the construction industry. This year, it is estimated at 23.93% thanks to the recovery of the economy and strong recovery of the construction sector. Graph 5, 6: Value and growing rate of construction and investment in Vietnam
Xy lp ( t ng)

250,000 200,000 150,000 100,000 50,000 2007

0.37% 191,051 23.93% 170,277 148,817 18.58% 125,500 101,266 12.01% 95,969 79,617 14.42%

232,642 211,493

30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

1,200,000 1,000,000 800,000 600,000 400,000 200,000 -

Tng vn u t ( t ng)

Tng trng (%)

1,011,381 954,133

30.00% 25.00% 20.00% 15.00% 10.00%

863,210 776,326 696,406 624,392 564,432 531,987 437,702

24.20%

12.20% 10.70% 10.00%

3.80%

5.52%

6.00%6.00%6.00%6.00% 4.50% 3.00% 1.00%

5.00% 0.00%

2009 2011F 2013F 2015F

S ou rce: BMI, PSI Resear ch In 2010, prices of input materials have strongly fluctuated especially in steel prices; the continuous increasing and decreasing price have a strong impact on the progress of construction. While the cement price in the market is relatively stable or increases slightly, cement price is strongly fluctuated in southern market, where there is limited supply but a lot of demand.

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Stock a nalysis repo rt -PVX Table 3: Price movement of input materials

Input materials
cement PC40 (VND/kg) % movement Construction steel(VND/kg) % movement

T6-07 1,055 10,300

T12-07 1,120 6.2% 15,900 54.4%

T6-08 1,400 25.0% 18,900 18.9%

T12-08 1,000 -28.6% 13,000 -31.2%

T6-09 1,065 6.5% 11,500 -15.0%

T12-09 1,100 3.3% 12,000 8.6%

T6-10 1,250 13.6% 14,000 16.7%

Source: PSI Research Assessing the projects implemented by PVN and the development potentials of construction industry and the position of PVX, we develop a revenue plan for construction activities in the future as in the chart below. Revenue strongly increases in the period 2009-2011 thanks to business expansion of PVXs member companies as well as PVX working as a general contractor for EPC projects and a series of new projects started in the 2009 -2011 period. Graph 7: Forecast revenue from construction in the coming years
20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 2015F

Xy lp ( Tr ng)

Gi vn (Tr ng)

LN gp (Tr ng)

S ource: PV X,PS I forecast Table 4: Forecast revenue COGs and gross profit in construction activities
2007 Construction ( mil VND) CoGS (mil VND) Gross profit (mil VND) 694,117 662,262 31,855 2008 1,754,000 1,591,155 162,845 2009 3,731,410 3,387,444 343,966 2010F 6,230,000 5,607,000 623,000 2011F 14,760,000 13,284,000 1,476,000 2012F 17,250,000 15,525,000 1,725,000 2013F 17,360,000 15,624,000 1,736,000 2014F 17,440,000 15,696,000 1,744,000 2015F 17,500,000 15,750,000 1,750,000

S ource: PVX, PS I forecast Mechanical activity - industrial production Currently industrial production activities account for 1.5% of total revenue structure of PVX. However, with the expansion of mechanical operations, pipeline production, steel industry, cement, building materials and production ... the proportion of the industrial manufacturing sector will increase rapidly in the overall revenue structure of PVX in the future and is expected to account for 30% of total revenue by 2015. The reason for revenue restructuring mainly comes from PVNs deployment of new oil, gas mines. In the development plan from 2010-2015, there will be 14 new mines and the demand www.psi.vn | resea rch@psi.vn PSIs r ep orts a re a vailabl e on ou r websit e

Stock a nalysis repo rt -PVX to manufacture base for rigs, oil-gas pipelines, superstructure block, rig and piping systems in oil refinery plan is very high. Demand for pipeline is up to 292,179 tons for the 2010-2015 period and 298,271 tons for the 2016-2025 period. Recently, the pipeline system of Vietnam-PM3 Ca Mau has been implemented with the length of 298km. The imported cement-covered pipe system for petroleum storage- Cu Lao Tao is 2.8 km long. Producing and manufacturing the pipeline project will help PVX to expand its business to mechanical engineering, producing construction materials for the petroleum industry. Now PVX has some strategic development plans such as: cement plans, especially 12/9 cement plant, Nghi Son refinery plant- Thanh Hoa as well as industrial, construction development plan in Nam Thanh-Bac Nghe economic zone and in the North. The cement and steel demand is still very high as PVX and its member companies are implementing many projects specialized in petroleum and real estate field. In addition, PVX established mechanic plant for building new rig and repairing water drilling rig (up to 350m deep), manufacturing superpower structure, oil and gas pipe manufacturing plant, oil and gas valve manufacturing plant, tank manufacturing plant, pipe wrap insulation factory ... The projects also focus on the new built ships, specialized ships containing oil, petroleum products, storage & warehouse for petroleum, petroleum transshipment port... On July 15 2010, the petroleum pipe coating plant was officially inaugurated and put into operation with the first pipe system of 1.5 km and diameter pipe 16 " for Nhon Trach 2 gas supply chain for power plant. Pipe coating plant is now producing 30km pipe with the diameter of 12 " for the Hai Su Trang (White Rhino) - White Tiger projects, a gas pipeline for Lot B - O Mon, gas pipelines Thien Ung- North Con Son 2 with the signed value over $250 million. With the expansion to mechanical engineering services, PVS and PVX will be the 2 units dominating the mechanic market in the petroleum industry in Vietnam and for the projects that PVN are investors. Table 5: Some major construction projects are underway
Project name
Mechanic manufacture and material for construction plant- Nghi Son- Thanh Hoa Petroleum steel pipe manufacturing plant- Sao MaiBen Dinh- Vung Tau Pipe coating plant- Phu My 1 industrial zone Steel structure and concrete plant, Binh Phu, Thach That, Ha Noi. 12/9 cement plant, Nghe An PVC-FECON concrete Plant, Kim Bang- Ha Nam 2,5

Area (ha) 10 8,5

15 1

Capital (bil VND) 148 1,490

517,44 148,53

Progress Started 3/2010 and finished in 2010 Capacity 100,000 ton/year, started in 2010
Finished and operated 2010, total contract value US 250mil Concrete mixing station 380,000 ton/year, starting in 2010 Started in 2009, expected to finish in 2011, capacity 560,000 ton/year Started in 2/2010, expected to finish in 12/2010,

814 300

Source: PVX, PSI Research

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Stock a nalysis repo rt -PVX The revenue growing rate will increase rapidly in the coming years thanks to a lot of projects such as cement production, industry steel pipe, oil-coated pipe, rig base manufacturing, upper block, base platform, floating storage, mechanical engineering in the petroleum industry. This graph below is PVXs revenue growth in the future: Graph 8: Revenue forecast for industrial production activities
9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 2015F

C kh ch to( Tr ng)

Gi vn (Tr ng)

LN gp (Tr ng)

S ou rce: PVX , PS I Rese arch Table 6: Forecast revenue- CoGS and profit in mechanics and industrial production
2007 Mechanics- industrial production ( mil VND) CoGS (mil VND) Gross profit (mil VND) 2008 2009 60,518 49,793 10,725 2010F 415,000 340,300 74,700 2011F 1,980,000 1,584,000 396,000 2012F 3,450,000 2,760,000 690,000 2013F 6,160,000 4,928,000 1,232,000 2014F 7,840,000 6,272,000 1,568,000 2015F 8,050,000 6,440,000 1,610,000

Source: PVX, PSI Research Assessing real estate business in Vietnam Vietnam is a country with a young population and highest economic growth rate in the region. With the population of 85.7 million people (on 1/4/2009) and 43% of the population in Red River Delta (19.5 million) and the Cuu Long (17.1 million), where the population density is highest in Vietnam, especially in big cities. Also according to statistics, the population living in cities in 2009 increased to 25.3 million people, accounting for 29.6% of the total population. Rapid urbanization rate recently has strongly affected real estate business in the region. Population of Hanoi is 6.4 million people; the population living in urban areas is 40.8%. Ho Chi Minh City's population is 7.1 million people and the population in urban areas is 83.2%. In some other provinces such as Ba Ria - Vung Tau, the population is 994,837 people, of which the urban population reached 49.7%, the population of Quang Ninh province 1.1 million people and in the urban reached 19.6%. GDP per capita in Vietnam recently has increased sharply up to over $ 1,040 per person, and

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Stock a nalysis repo rt -PVX especially in big cities like Hanoi (GDP per capita reached 2,000 USD), in Ho Chi Minh city (GDP per capita reached $ 2,800), in Ba Ria - Vung Tau (GDP per capita reached 4,000 USD), in Quang Ninh (GDP per capita reached $ 1,500)... These are the areas in which PVX targets to implement real estate projects. In the real estate business, PVX plans to develop in five areas including: urban development houses for sales, trading centers, office rental, hotel - resort and infrastructure for industrial zone. House and department for sales activities The most attracting activities for the company and real estate investors recently are apartments for sales, total number of sold apartments during period 2004-2009 reached 42,778 units, mainly in two largest cities, Ho Chi Minh City and Hanoi. Apartment prices have fluctuated dramatically in recent years, luxury apartment prices in Ho Chi Minh City in 2008-2009 decreased 50% and slightly recover in 2010, while the apartment prices are almost stable, demand for mid-level apartments and popular class with the price less than USD 1,500 m2 in Hanoi is relatively high, especially for apartments priced below USD 1,000/m2. Table 7: The number of apartments sold in Hanoi & Ho Chi Minh recently
Class High grate & luxury mid-level popular Total 2008 6,008 7,141 2,068 15,217 2009 7,292 10,290 6,186 23,768 2010F 15,911 15,787 5,130 36,828

Source: CBRE There are 73% of mid-level and popular class apartments sold at the starting prices from USD700-900/ m2 in Hanoi in the first quarter of 2010, of which supply is mainly from Ha Dong, Hoai Duc accounts for 71% of the market. Now, the new urban areas projects are mainly in two areas both in quantity and total supply thanks to the advantages of urban transport, planning and development of the capital, urban migration in Hanoi and the housing market in Hanoi are quite exciting in the past few years. Similar to the real estate market in Ho Chi Minh city, the cheap apartments from USD 700900 m2 are very attractive to customers, while the apartments priced from USD 1,500 m2 or more are quite difficult to sell, the apartment market in Ho Chi Minh is fairly quiet. In the future, the housing market will be very attractive for the Corporation to develop real estate projects, especially development projects in Hanoi and Ho Chi Minh. Office for lease activities Office leasing market is currently facing with supply excess because a lot of office for lease projects have operated or are going to operate, while the economy is not strongly recovered, leading to slightly increase in rental demand. According to statistics, the supply of office rental in Hanoi now has 14 grade A office buildings with the area of 137,000 m2, with 37 grade B office buildings with the area of 330,000 m2 and 57 grade C buildings with the area

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Stock a nalysis repo rt -PVX of 200,000 m2. It is estimated that a lot of projects in the west of Hanoi will come into operation in 2010-2011 such as Sentinel Place and Grand Plaza (60,000 m2), Keangnam Landmark Tower (90.000 m2), Song Da Twins (50,000 m2), EVN Tower (16,000 m2), Mipec Tower (23,000 m2), Southern Peal (65,000 m2) leading to supply excess about 150,000 m2, the space rate of grade A office can increase to 18%, while class B to 11%. The situation in Ho Chi Minh city is similar to Hanois with excess supply due to a series of new projects in operation. The space rate has increased 15.6% with grade A, 11.4 % with grade B and 14% with grade C in quarter 1/2010 and the rent has fallen to 31% over the same period in 2009. Supply increase is expected in grade A and grade B 110,000m2 & 75,000 m2 respectively. Trading center activities Trading center business, particularly large, luxurious ones in the center are still scarce and the rent increase dramatically recently. Trading center area in the center of Hanoi is 49,197m2 and in the peripheral area is 54,379 m2. It is expected that complex buildings in the west of Hanoi are put into operation in the coming time, the supply will increase and the price will decrease slightly, especially Grand Plaza project and Keangnam Landmark Tower. The rent in Ho Chi Minh City has increased to USD108.8 m2, especially the trading centers in the city up to USD200 m2 such as Vincom Center. Supply continues increasing in the future, however at the moment, the demand for trading centers in Ho Chi Minh is still high. Graph 9,10: Revenue, supply for trading centers in Ho Chi Minh City

Hotel- resort activities Hotel business has recently prospered with the increase in number of tourists thanks to the economic recovery. However, recently the on-going projects related to villas and resorts are the most impressive and attractive to investors. Eight projects were offered for sales in 2008: Tuan Chau Residences, The Montgomery Links, Mui Ne Domain, Ho Tram Sanctuary, Long Thanh Gofl, Long Hai Laguna, Con Dao Evasion Hideaway, and Sea Link Phan Thiet with a total of 1,882 villas. Three projects offering in 2009 were Hyatt Regency Residences, Ocean View Villa, Phan Thiet Castles Hill with 174 apartments, 196 villas and 124 ground lands for villas. In 2010, there are some new projects offering such as Cat Ba amanita, The First Resort & Villas, Ecopark, Hill Grand Arena, Six Senses Saigon River...

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Stock a nalysis repo rt -PVX Hotel market in the first quarter of 2010 has also prospered compared with the same period; room reservation rate in the hotel now is 40-60% of its capacity. The number of hotel rooms in five star hotels is 2,830 with average booking rate of 62.3%, the number of rooms in 4-star hotels are 1,404 with an average booking rate of 49.25% and number of room in 3-star hotel is 1,828 with average booking rate of 58.92%. Tourists coming to Vietnam in 2010 can reach 5.5 million people. The number of 4-5 star hotel rooms in Hanoi increased sharply in 2010 and the supply from Chamvit (600 rooms), Crown Plaza (386 rooms), Intercontinental Keangnam (383 rooms). In Ho Chi Minh, it is expected to have 3,506 rooms more for the period 2010-2013 from the hotels such as the Liberty 6 (year 2010 - 144 rooms), Godden Tower (2010 - 120 rooms), Saigon Givral (year 2010 - 209 rooms), New Pacific (2011 - 120 rooms), Grand Extension (2011 - 170 rooms)... Infrastructure for industrial park By the end of 2009, there were 249 industrial parks approved for operation with the area of 63,173 hectares in which land available for lease is 38,858 hectares, accounting for 61.5% of the total area and 174 industrial parks were put into operation with an area of 38,804 ha and 74 ones are in compensation and clearance process with an area of 14,792 ha. The average filled rate of industrial parks is 48% in Vietnam nowadays. Industrial parks have attracted 3,600 foreign investment projects with the total registered capital of USD 46.9 billion and 3,200 local projects with registered capital of VND 254,000 billion. Industrial zones are mainly located in Ho Chi Minh City, Binh Duong, Dong Nai, Vung Tau, Long An, Hanoi, Vinh Phuc, Hung Yen, Hai Duong and Bac Ninh ... The land rent in industrial parks also varies according to the regions. The highest rent is in Ho Chi Minh City and Hanoi with the average of 2.5 USD/m2/year, while in other provinces the average rent is about 1.0 - 2 USD/m2/year. With economic growing rate now, the industrial zone business will continue to develop especially in the industrial centers such as Binh Duong, Dong Nai, Vung Tau, Long An, Tien Giang, Hung Yen, Bac Ninh, Hai Duong, Vinh Phuc... Because in big cities like Ho Chi Minh, Hanoi, industrial zones are gradually replaced by the urban area and plants intend to move to the nearby city with sea transport convenient for exports. Industrial zone-real estates activities of PVX Currently infrastructure- real estate business only accounts for nearly 5% of PVXs revenue structure. Therefore, with the expansion of infrastructure for industrial zone and real estate business will enable PVX to increase revenue, profit strongly from its potential business. Table 8: Some industrial parks and real estates PVN and its member company implementing:
No Project name Invested capital (bil VND) 4,000 Area (ha) Implementation progress

Petroleum University Urban areaVinh Phuc

72,21

Pl ann i ng ha s be en a ppr oved 1 / 50 0 an d st art ed pha se1 i n l at e 2 01 0; ph as e 1 fr o m 2 01 0-2 01 3, ph as e 2 fr o m 20 14 -20 19

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Stock a nalysis repo rt -PVX

2 Hoai Duc urban area- Hanoi 2,000 190 P has e 1: i n frast ru ct u re l evel i n g w ort h VND 4 50 bi l l i on has a ppr oved 1 / 20 00 an d i s ex pe ct ed t o a ppr ove t he pl an 1 / 50 0 i n 2 01 0 an d t h e pr oj ect was st art ed i n 2 01 1. The proj e ct o f PV N i s l oc at ed i n t h e My Di n h wi t h t h e area of 2 5h a an d i t i s e x pe ct ed t o b e co mpl et ed i n qu art er 4 / 2 01 2 The pl an 1 / 50 0 was ap pr o ved an d i t i s e x pe ct ed t o st art i n l at e 2 01 0, l ast i ng fr om 2 01 0-2 02 0 S t art ed i n q uart er 1 / 20 10 an d ex pect ed c o mpl et i on i n 20 12 S t art ed on 3/ 2 / 20 10 , t h e proj ect i s e xpect ed t o b e c o mp l et ed i n 20 12 , st art ed t o record re ven u e i n 20 10 C ompl et i n g pl an 1 / 20 00 and i t s ex pe ct ed t o b e a p pr ove d i n Q3 2 01 0, st art ed l at e q uart er 4 / 20 10 an d co mpl et ed i n 20 20 , t he pr oj e ct i s l ocat ed i n Hal on g e cot ou ri s m are wi t h 8 , 00 0 h a wi de. P has e 1 o f t he proj e ct pl ans t o i n vest 8 25 bi l l i on VND, t h e pr oj ect i s i n t he process o f c omp en sat i on, si t e cl ear anc e. The pr oj e ct st art ed i n q uart er 2 / 2 01 0 an d sch ed ul e for c ompl et i on i n 2 02 0 P l ann i ng w as c ompl et ed 1/ 2 00 0, t h e proj ect i s i n t h e co mpl et i ng pr oces s an d st art i n 2 01 1 Impl ement ed Ph ase 1 an d fi l l i n g rat e i s u p 3 0%, p art i cu l arl y KOBE st e el co mpan y h as l on g-t er m l ea se o f 40 ha, i mpl ement i n g t he pr oj e ct 's sec ond ph ase and co mpl et ed i n De cemb er 2 01 4 S t art ed i n Ma y 2 01 0, sched ul ed for c o mpl et i on i n De cemb er 2 01 5 C ompl et ed Ph ase 1 and fi l l i n g rat e i s n earl y 10 0 %, pre p ari n g t o i mpl e men t Ph as e 2 o f t he proj ect Ap pr o ve d pl an 1 / 5 00 an d pre pari ng t o st art

5 star hotel complex in My Dinh

7,373

3,82

Petroleum urban area in Vung Tau

1,500

69,4

5 6

Office, trade and resident in 30/4 Street, Vung Tau Trading center, office, high-grade resident in Cot Dong Ho, Ha Long Ha Long cultural eco-tourism urban area

920 800

1,61 1,02

1,500

1,130

Tan Vien high-grade eco-tourism area

825

1,024

Tien Giang Petroleum industrial park

1,217

3,560

10

Hoang Mai Industrial park

850

340

11

Dong Hoi industrial park

5,562

1,436

12

Hoa Cam industrial park stage 1, 2

362

266

13

New urban area Chi Linh- Cua Lap

4,000

69

Source: PVX, PSI forecasts 1. Petroleum University project in Vinh Phuc Urban Area is implemented in center town- Vinh Yen Town, one of the six satellite urban areas around Hanoi, with a total invested capital of more than VND 4,000 billion and the expected profit of about VND 1,000 billion in the future. There are 23 new urban area projects in real estate market implemented in Vinh Phuc, Vinh Yen Town, Me Linh with a planned area of 1,154.48 ha , the new residential area of 251.3 hectares. Apart from Petroleum University project, there are other similar projects including: Dam Coi Urban Area TMS Land with the area of 151 hectares (invested capital 2,200 billion VND), urban area of Ha Tien Temple - Lac Hong Construction JSC with the area of 59.7 ha (298 billion VND invested), new urban area in Ha Phong - Ha Phong Joint Stock Company with an area of 37.06 hectares (57 million dollars invested), new urban

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Stock a nalysis repo rt -PVX area in Quang Minh Long Viet by Long Viet Construction & Investment Joint Stock Company with an area of 45 hectares (600 billion VND invested). 2. Petroleum Urban Area in Hoai Duc - Ha Noi: This project is very potential as land in the west of Hanoi, especially in Hoai Duc district is very attractive to investors. With planned area of 190 ha and the initial expected capital of 450 billion VND for first stage, and for the whole project of about 2,000 billion VND. We estimate it will generate approximately VND 3,500 billion profit for PVX after finishing projects. In the west of Hanoi, there are hundreds of new urban area projects, notably North An Khanh urban area project (Vinaconex - Posco E & C), South An Khanh Urban area project (SUDICO), My Dinh new urban areas, Van Canh new urban area, Highway 32 new urban area ... and these projects are saleable very quickly and generate great profits for the investors. 3. Some other projects: These projects implemented by its subsidiaries and associated companies could also bring big profits such as Vung Tau Petroleum Urban Area, Chi Linh- Cua Lap new urban area, eco-tourism area in west of Ha Long, Tan Vien Ecology area, Tien Giang Petroleum industrial park... With its existing projects and coming projects, PVX is very potential in real estate business, particularly from its member companies such as: PetroVietnam Premier Recreation JSC (PVR), PetroVietnam Nghe An Construction JSC (PVA), Petroleum Industrial & Civil Construction Co., Ltd (PXI), and the associated companies of PVX. We forecast revenue growth from infrastructure for industrial and real estate business of PVX as the table below: (However, the real estate projects of PVX primarily in the first phase of investment, so we do not have enough information to determine the NAV of each project in order to accurately assess the value of NAV per Share to determine the best price of PVX)

Graph 11: Forecast revenue from infrastructure- real estate business

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 2015F

Kinh doanh BS ( Tr ng)

Gi vn (Tr ng)

LN gp (Tr ng)

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Stock a nalysis repo rt -PVX Source: PVX, PSI forecast Graph 9: Forecast revenue-CoGS and gross profit in infrastructure- real estate business
2007 Real estate business (mil VND) CoGS (mil VND) Gross profit (mil VND) 2008 2009 187,285 133,008 54,277 2010F 210,000 147,000 63,000 2011F 900,000 630,000 270,000 2012F 1,840,000 1,196,000 644,000 2013F 3,920,000 2,548,000 1,372,000 2014F 6,080,000 3,952,000 2,128,000 2015F 8,750,000 5,687,500 3,062,500

Source: PVX, PSI forecast Financial investment activities With equitization of PVXs member companies recently and the reorganization of companies operating in the construction sector - real estate business material production for construction - mechanical manufacturing has helped PVX increase the financial investment in its subsidiaries, associated companies and long-term investments and capital withdrawal from some member companies which generate a lot of financial income in 2009-2010. The Company has the advantages of implementing works within the Group, therefore it can collect money easily and use the idle cash for investment. This is one of the major advantages of PVX compared with other units in this sector. Table 10: List of companies with capital contribution of PVX
Subsidiary 1 2 3 4 5 6 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 Cong ty CP Xay lap Dau khi Mien Trung Cong ty CP Xay lap Duong ong Be chua Dau khi Cong ty CP Xay dung Cong nghiep va Dan dung Dau khi Cong ty CP Ket cau Kim loai va Lap may Dau khi Cong ty CP Xay lap Dau khi Ha Noi Cong ty CP Thi cong Co gioi va Lap may Dau khi Company code PXM PXT PXI PXS PVC - HN PVC - ME PVC-SG PVC - CM PV SBD PVC-HEERIM PVR PV Building PVC-SSG PVFC Land Viettubes PVE Petrowaco PTL PVL PVME PVID PVC-FECON PV Machino PVC HP Owners equity ( bn) 150.00 200.00 300.00 200.00 100.00 200.00 130.00 100.00 55.00 20.00 300.00 55.00 6.00 500.00 33.70 80.00 100.00 1.000.00 500.00 10.00 200.00 150.00 386.38 50.00 % of PVX Contribution 51.00% 51.00% 51.00% 51.00% 55.00% 51.00% 30.77% 30.00% 40.00% 50.00% 35.60% 40.00% 25.00% 30.80% 29.94% 40.50% 30.00% 28.45% 28.00% 26.00% 25.50% 25.00% 36.00% 30.00%

associated companies
Cong ty CP Xay lap Dau khi Sai Gon Cong ty CP Phat trien Do thi Dau khi Cong ty CP Quan ly va Phat trien nha Mien Nam Cong ty CP Thiet ke Quoc te Heerim PVC Cong ty CP Kinh doanh Dich vu cao cap Dau khi Viet Nam Cong ty CP Quan ly va Phat trien nha Dau khi Cong ty CP dau tu xay dung va kinh doanh dich vu nha Dau khi - SSG Cong ty CP BDS Tai chinh Dau khi Viet Nam Cong ty TNHH Vietubes Cong ty CP Tu van Dau tu va Thiet ke Dau khi Cong ty CP BDS Dau khi Cong ty CP Dau tu Ha tang Do thi Dau khi Cong ty CP BDS Dien luc Dau khi Cong ty CP Co dien Dau khi Cong ty CP Dau tu va Xay dung khi Cong ty CP Be tong Du ung luc PVC-FECON Cong ty CP May Thiet bi Dau khi Cong ty CP Dau tu Xay lap Dau khi Hai Phong

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Stock a nalysis repo rt -PVX

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Cong ty CP Dau tu Thuong Mai Dau khi Song Da Other long-term investment Cong ty CP Dau tu be tong cong nghe cao SOPEWACO Cong ty CP Thiet ke WORLEPARSON Dau khi Viet Nam Cong ty CP Hong Ha Dau khi Cong ty CP Xay dung Song Hong Cong ty CP Xi mang Ha Long Cong ty CP Dau tu Xay dung KCN DK IDICO Long Son Cong ty CP Xay lap Dau khi Thai Binh Duong Cong ty CP Dau tu & Xay lap Dau khi Kinh Bac Cong ty CP Xay lap Dau khi 4 Cong ty CP Xay lap Dau khi PVC Truong Son Cong ty CP Dau tu Xay dung Cong nghiep Luyen kim va Do thi IMICO Cong ty CP Co dien Dau khi Cong ty CP Thiet bi noi ngoai thap Dau khi Cong ty CP San xuat Ong thep Dau khi Viet Nam Cong ty CP Dau tu Dau khi Song Hong ( Nha Trang) Cong ty CP Xay lap Dau khi 1 Cong ty CP Xay lap Dau khi Viet Nam Cong ty CP Dau tu Xay dung Vinaconex - PVC Cong ty CP Dau tu Dau khi Song Hong ( Nha Trang) Cong ty CP Dau tu Xay lap Dau khi Hoa Binh 150.00 80.00 16.00 80.00 150.00 982.00 827.22 50.00 50.00 250.00 60.00 200.00 N/A 70.00 500.00 300.00 250.00 100.00 45.00 300.00 50.00 25.00% 12.80% 7.00% 15.00% 12.00% 15.00% 14.50% 4.00% 5.00% 2.00% 5.00% 2.50% N/A 10.00% 10.00% 15.00% 2.00% 15.00% 11.10% 15.00% 10.00%

PHH ICG PIVLS PVC TBD PVC-KBC PVC4 PVC-TS PVC-IMICO PVM&E PVC-METAL PV PIPE PVIN PVC - 1 PVCI PVV PVIN PVC 5

Soruce: PVX, PSI research PVX invested in subsidiaries, associated companies and long-term investment with an amount of 2,000 bil VND at the price of 10,000 VND per share. According to our observations, the listed stock of PVXs member often fluctuates from 22,000 to 30,000 VND per share, therefore the average profits from financial investments are at around 2,000 billion VND. Financial investment activities generate relatively large income for PVX. We forecast that the financial income of PVX depends on capital withdrawal from its member, receiving dividend from the capital contribution and the short-term deposit. Table 11: Revenue-expense from financial activities of PVX
Financial investment Revenue (mil VND) Financial exp (mil VND) 2007 18,192 16,016 2008 44,174 29,026 2009 140,835 37,601 2010F 834,283 107,787 2011F 814,386 226,560 2012F 583,560 294,400 2013F 691,414 358,400 2014F 817,497 442,469 2015F 953,878 494,213

Source: PVX, PSI forecast Graph 12: Revenue-expense from financial activities in coming years

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Stock a nalysis repo rt -PVX

1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 2015F

Doanh thu (Tr ng)

Chi ph ti chnh (Tr ng)

Source: PVX, PSI forecast Comparing business activities of PVX with some listed construction enterprises 2007-2009 period witnessed quick growth of PVX revenue with an average increase of 128.83% per year, much higher compared to other companies in the industry. Performance indicators of the Company are lower compared with the average one of this industry. ROE, ROA, profit margin of the company is average compared to other large companies in the construction industry in Vietnam. Gross profit margin, net income / revenue, ROE are at the average rate for the period 2007- 2009, as the Company starts equitization & restructuring in 2007. In 2009, profitability of PVX was equivalent with large and listed enterprises in the industry such as VGC, CTD ...

Graph 13, 14, 15, 16: Compare business activities with some construction companies

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Stock a nalysis repo rt -PVX Gross profit margin (average 20072009)

12.00% 10.00% 8.00% 6.00% 6.00% 4.00% 2.00% 0.00% VCG CTD HBC SC5 PVX 11.13% 10.02% 10.16% 120.00% 8.22% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% VCG CTD HBC SC5 PVX 30.85% 14.37% 4.86% 24.16% 140.00%

Revenue growth rate (average 20072009)

128.83%

net income/revenue (average 2007-2009)

10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 9.46% 30.00% 25.00% 5.13% 4.28% 3.11% 10.00% 4.20% 20.00% 15.00%

ROE (average 2007-2009)

24.16%

22.48%

14.37% 9.53% 4.86%

5.00% 0.00% VCG CTD HBC SC5 PVX VCG CTD HBC SC5 PVX

Source: PSI Research

Assess financial situations Financial situation of PVX is healthier and more stable than that of other companies in the field. In 2009, total debt was of around 687 billion VND and the ratio of debt/ equity of about 39%. This ratio decreased sharply as PVX increase its capital to 2,500 billion VND. This ratio is the safest in construction companies in Vietnam nowadays.

Graph 17, 18, 19, 20: PVXs financial situation

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Stock a nalysis repo rt -PVX

Profit after tax (VND mil)

250,000 200,000 150,000 100,000 50,000 2006 2007 2008 2009 Q1/2010 82,020 121,158 228,962 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 -

Share capital ( VND mil)

1,500,000 1,500,000 1,500,000

15,494

17,799

150,000

150,000

2006

2007

2008

2009

Q1/2010

Total assets ( VND mil)

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 2006 2007 2008 2009 Q1/2010 812,424 853,285 3,822,294 5,648,503 5,303,086

Revenue (VND mil)

4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 2006 2007 2008 2009 Q1/2010 342,117 726,816 1,808,500 1,052,077 4,073,122

Source: PVX, PSI Research Financial forecast Revenue, CoGs, profit assumptions: Based on collected information on PVXs business operations and forecasts on the development of construction industry, industrial production and infrastructure for industrial parks, real estate business, planning & development of oil and gas sector as well as the development of real estate market in Hanoi, Ho Chi Minh City, Vung Tau and Quang Ninh ... We prudently forecast the result of PVXx business activities as follows: We rely on the signed contracts as well as progress billing of the construction contract for our revenue forecast in 2010. Cost of goods sold is relatively stable and tends to decrease, as some input materials the Company have itself: stone for construction stone, cement... Year 2010 will be the start year for the period 2010-2015 to accelerate in mechanical activity and industrial production to increase revenue in revenue structure of PVX. These activities are relatively favorable as oil and gas industry develops its exploration and exploitation in Vietnam as well as some places like Russia, Venezuela, Egypt ... and to manufacture the largest base for oil rig, tanks, LPG and oil storage equipments. The Company has started industrial production works such as cement plants 12/9, concrete factory PVC-FECON, Tien Giang engineering service port, straight welded steel pipe factory Profit from infrastructure- real estate business is boosted by PVXs focus on developing key www.psi.vn | resea rch@psi.vn PSIs r ep orts a re a vailabl e on ou r websit e

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Stock a nalysis repo rt -PVX real estate projects: Petroleum University Urban Area - Vinh Phu, Petroleum urban areaHoai Duc Hanoi, Petroleum Urban area - Vung Tau, 5 star hotel financial services area in My Dinh, Hoang Mai Industrial Zone, Hoa Cam Industrial Zone ... Income from financial activities was based on the progress of capital withdrawal, investment in shares of its member companies and cash, cash at bank in the expected annual balance sheet. Revenue from associated companies, joint ventures is dividends received from its member companies, we appreciate this is a very large amount because there are a lot of subsidiary companies. Financial expenses are mainly from short-term and long-term loan on the annual balance sheet. Detailed assumptions: Revenue growth rate in 2010 about 62%, in 2011 approximately 168%, in 2012 about 30%, and from 2013 to 2015 average about 25% per year and estimated for the long term at about 10% per year. The rate of COGs/revenue will be at 89-90% for the period 2010-2015, and stabilize at about 90% from 2016 onwards. G&A expenses average 4.5% of total sales in 2010-2011 and decreased gradually to about 4% of total revenue in 2015. Fixed assets increased as planned, the expected average depreciation period is 5-7 years with other types of assets, straight line depreciation method Registered capital will increase from 2,500 billion VND in 2010 billion to 10,000 billion VND in 2015 Percentage of dividend paid at 15% per year

Table 12: Forecast business performance of PVX in coming years

2010E Construction output Revenue (mil VND) CoGs (mil VND) CoGs/Revenue Gross profit (mil VND) Gross profit/ Revenue Profit after tax (mil VND) Profit after tax/ Revenue ROA ROE Charter capital (mil VND) EPS (VND) 8,000,000 6,598,367 5,898,940 89.4% 699,426 10.6% 853,651 12.9% 9.76% 27.71% 2,500,000 4,268 2011E 20,000,000 17,695,621 15,498,000 87.6% 2,197,622 12.4% 1,217,952 6.9% 7.10% 24.39% 4,000,000 3,748 2012E 26,000,000 22,994,310 19,481,000 74.7% 3,513,311 15.3% 2,043,555 8.9% 9.31% 28.91% 5,000,000 4,541 2013E 32,000,000 27,993,073 23,100,000 82.5% 4,893,074 17.5% 2,981,761 10.7% 11.22% 30.25% 6,000,000 5,421 2014E 36,000,000 31,992,084 25,920,000 81.0% 6,072,085 19.0% 3,708,805 11.6% 11.62% 26.63% 8,000,000 5,298 2015E 40,000,000 34,991,342 27,877,500 79.7% 7,113,842 20.3% 4,406,679 12.6% 12.18% 24.01% 10,000,000 4,896

Source: PVX, PSI forecast

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Stock a nalysis repo rt -PVX Valuation Pricing method We combine four methods: FCFE, FCFF, P/E, P/B to determine the expected price for PVX, these indicators are compared with the average price in construction, real estate business, mechanical engineering and construction companies with a similar scale in Southeast Asia, the Companys share is prudently priced at 35,700 VND per share.
(PVX also may face with some risk if PVN receive some companies in Vinashin and may transfer to PVX as the parent company. We do not have enough information about this and could not assess, calculate and include in this report) Valuation result FCFE FCFF P/E P/B Price (VND) 43,093 39,109 38,521 22,123

Source: PSI forecast

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Stock a nalysis repo rt -PVX

APPENDI X: FINANC IA L STATEMEN T

Revenue Cost of goods sold Gross profit Financial income Financial expense Selling expense G&A expense Net profit Other income Profit before tax Profit after tax TOTAL ASSET Current Assets Cash and cash equivalent Short-term investment Account receivables Inventories Other short-term assets Long-term assets Long-term receivables Fixed assets Tangible fixed assets Cost Accumulated depreciation Long-term investment Other long-term assets TOTAL RESOURCES Short-term borrowing & liabilities Short-term borrowings Long-term borrowings Long-term borrowings Owners equity Contributed capital Retained earning Other funds Debt ratios Quick ratio Current ratio Capital structure ratios Debt/ Owners equity Debt/Total assets Operating ratios Inventory turnover. Account payable turnover Account receivable turnover Profitability ratios Net profit/ revenue (GM) Operating profit/revenue (Operating margin) ROA ROE 2008 726,816 690,709 36,107 18,192 16,016 25,374 12,909 4,890 17,799 17,799 853,285 756,767 44,130 524 309,721 319,075 83,317 96,519 59,119 56,075 148,650 (92,575) 22,399 853,285 853,285 669,588 320,297 3,372 3,372 179,261 150,000 26,399 1,064 0.65 1.13 375.4% 78.9% 2.44 7.23 5.08 5% 1% 2.1% 9.9% 2009 4,072,114 3,653,617 418,497 128,031 37,601 4,608 266,071 238,247 26,592 264,839 228,962 5,608,972 3,590,395 474,324 136,553 1,891,315 971,499 116,704 2,018,577 639,239 482,937 752,508 (269,571) 1,160,714 5,608,972 5,365,629 3,343,243 534,858 266,222 256,817 1,753,184 1,500,000 223,761 2,980 0.73 1.07 205.9% 63.9% 5.66 9.16 12.25 10% 4% 4.1% 13.0% 2010F 6,598,367 5,898,940 699,427 736,931 107,787 3,300 316,800 1,008,471 126,394 1,134,865 948,501 9,675,605 6,609,320 1,534,679 221,268 3,090,072 1,574,196 189,105 3,066,285 764,987 579,524 903,009 (323,486) 1,947,044 9,675,605 9,108,854 5,406,087 866,672 279,240 264,000 3,414,042 2,500,000 872,262 9,485 0.89 1.22 166.5% 58.5% 4.63 6.30 9.28 11% 6% 9.8% 27.7% 2011F 17,695,622 15,749,103 1,946,518 700,289 226,560 17,700 708,000 1,694,548 8,850 1,703,398 1,391,645 19,031,369 14,714,262 1,104,996 593,400 8,287,012 4,221,708 507,145 4,317,107 1,085,133 724,405 1,128,762 (404,357) 2,281,930 19,031,369 18,464,618 12,131,974 1,416,000 748,871 708,000 5,569,858 4,000,000 1,524,742 13,916 0.81 1.21 231.3% 67.5% 5.43 7.38 10.93 11% 7% 7.3% 24.9% 2012F 22,994,311 20,464,937 2,529,374 459,009 294,400 23,000 805,000 1,865,983 11,500 1,877,483 1,532,664 24,341,597 19,035,432 1,351,075 771,085 10,768,434 5,485,835 659,002 5,306,166 1,580,605 869,286 1,354,514 (485,228) 2,491,040 24,341,597 23,774,846 15,583,529 1,840,000 973,109 920,000 7,202,882 5,000,000 2,154,140 15,327 0.82 1.22 229.9% 67.9% 4.22 5.73 8.48 11% 7% 6.3% 21.2%

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Stock a naly sis repo rt -PVX DISCLAIMERS

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