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PVD [OP +17%] – Pegging day rates to oil offers visibility but lowers earnings

OUTPERFORM rating maintained but TP lowered to VND61,000. Management lowers NPAT guidance for 2015 citing a new pricing scheme for day rates linked to oil price. We think this offers better earnings visibility but the new guidance is too low. PVD’s new guidance is USD 70m (39% decline vs actual 2014) compared to old guidance of USD 100m. We lowered our NPAT forecast to USD 87m, incorporating lower expected day rates for JU and TAD following the new pricing guidelines.