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PVS [M-PF +1.2%] - Worsening outlook for Mechanics & Construction - AGM Note + Update Report

We maintain a MARKET PERFORM (M-PF) recommendation with 1.2% total return. We cut our target price by 37.2% as we revise down 2018-2022F earnings due to a worsening outlook for the Mechanics & Construction (M&C) segment without the Red Emperor project and a day rate cut at FSO Bien Dong. We forecast 2018 NPAT-MI will drop 21.9% due to a weak M&C segment on fewer projects and the deterioration of the floating oil storage segment due to day rate cuts.