Vietnam National Petroleum Group or Petrolimex, listed on the Ho Chi Minh Stock Exchange under the ticker PLX, is the largest petroleum distributor in Vietnam with over 50 percent of the domestic market. Established in 1956, the company operates an extensive network of 5,500 fuel stations across Vietnam.
In the first half of 2024, PLX recorded an increase in revenue of 11.6 percent, reaching US$6 billion, and an increase in profit after tax of 55.3 percent, reaching US$97.7 million.
This growth was fueled by stable petroleum business operations and a 0.6 percent increase in PLX’s output compared to 2023. Additionally, PLX opened 60 new fuel stations during the first seven months of the year.
Gross profit margin also improved with support from Decree 80, effective from November 2023. Specifically, in Vietnam the retail fuel price is capped by the Ministry of Industry and Trade. This Decree reduced the price adjustment cycle from 10 days to 7 days putting prices more in line with market prices.
Also of note, a draft Decree is currently being floated that could prohibit distributors from trading petrol between themselves. They do this, with a markup, in order to show increased revenue on their balance sheet which they in turn use to borrow money from banks, according to Nguyen Thuy Hien, Deputy Director of the Domestic Market Department at the Ministry of Industry and Trade. However, this then squeezes retailer profit margins who must sell petrol at or below the aforementioned price cap.
These revisions to the law could benefit Petrolimex by stabilising prices paid to distributors as well as ensuring the quality of petroleum products.
Disclosure: The author does not have any financial interest in PLX stock.
See also: How to Open a Trading Account in Vietnam: Technical Guide 2024