PC1 Group (HOSE: PC1) | 2Q26 Update, ADD - Upside +16.5%

Margin Expansion And Strong Ore Mining Offset EPC Weakness

PC1 2Q26 Performance

PC1 Group reported 2Q26 revenue of VND2,038bn (-26.1% YoY, -16.3% QoQ). Total GPM expanded to 23.0% of 2Q26 from 17.4% of 2Q25. This is mainly due to the lower contribution of electrical construction & installation, which has average GPM of 5-9%. NPAT-MI came at VND152bn (+27.6% YoY, -16.3% QoQ)

For 1H26, revenue totaled VND4,206bn (-12.3% YoY). GPM slightly expanded from 20.2% to 22.2%. NPAT-MI totaled VND333bn (+68.7% YoY), thanks to higher financial income, increase 169.4% YoY. 1H26 Revenue and NPAT-MI completed 40.2% and 52.5% of our previous forecast.

Segment Performance

PC1’s 2Q26 segments performance was mixed. EPC revenue fell 30.6% YoY to VND2,038bn, with GPM down 400bps to 4.6%, while steel pole revenue declined 65.5% YoY to VND184bn. Ore mining remained the key growth driver, with revenue up 38.1% YoY to VND319bn and GPM expanding to 50.1%. Energy revenue was broadly flat YoY at VND357bn, although GPM normalized to 47.5% from 58.3% in 1Q26. Thuong Ha’s first 6.5MW unit started ahead of schedule, supporting 2H26 energy output, though Super El Niño may limit margin recovery.

Extraordinary General Meeting

At its 24 July EGM, PC1 completed a significant Board reshuffle, appointing four new directors, including Trinh Khanh Linh, who was subsequently elected Chairwoman, Trinh Tien Dung, and two independent directors. Ms. Linh directly owns ~1% of PC1 and represents Mr. Trinh Van Tuan’s 21.38% stake, bringing her represented ownership to approximately 22.35%. Meanwhile, VietinBank Capital (~7.5%) participated through an authorized representative, while CII (~11.1%) did not participate in the meeting. We view the outcome as providing greater continuity following recent leadership disruption. The emergence of VietinBank Capital and CII as sizeable shareholders broadens PC1’s institutional ownership base, which could support stronger governance and oversight over time.

Earnings Forecast

We slightly revise our FY26E/FY27E/FY28E revenue forecasts to VND10,473bn/ VND15,358bn/VND18,362bn, respectively, and NPAT-MI forecasts to VND637bn/ VND1,127bn/VND1,673bn. The revisions mainly reflect the earlier-than-expected contribution from Thuong Ha, which increases hydropower capacity by 7.5% but contributes only 1.5% additional volume in FY26E, largely offsetting the impact of El Niño.

Target Price and Rating

We raise our risk-free rate to 8.0% (from 6.0%), lifting WACC to 14.1% (from 12.3%) and reducing DCF valuation by 26.9% to VND11,566bn (from VND15,802bn). Accordingly, we lower our 12-month TP to VND23,900/share (from VND25,900), implying 16.5% upside from PC1’s VND20,500/share closing price on 14 August 2026. We downgrade PC1 to ADD rating.