POW: STRONG 9M2019 PRELIMINARY RESULTS
18/10/2019 - 10:24
Target price: 17,457
9M2019 profit after tax jumped by 39.6% YoY to VND 2,549bn. This is partly attributed to 8% YoY increase in revenue to VND 26,852bn which was underpinned by 7.3% YoY rise in the average selling price to VND 1,532 per kWh. In addition, volume grew by 2.6% YoY rise in volume to 16.5 bn kWh.
Ca Mau 1& 2 lead growth. Ca Mau 1&2 gas fired plants, account for 34% of the power generation revenue, increased by 10% YoY to VND 8,651 bn. Vung Ang coal fired plant, account for 24.4% of the revenue, slightly declined by 0.7% YoY to VND 5,836bn. Nhon Trach 2 gas fired plant (HOSE: NT2, HOLD) revenue, account for 23.2% of revenue, also slid by 0.8% YoY to VND 5,789bn.
Hydropower performance fell due to low water levels. Hydropower revenue decreased by 8.6% YoY mainly attributed to lower volume. Hydropower volume fell by 22.4% YoY to 816.4 bn kWh due to extending dry season this year. Especially Hua Na, 180 MW capacity hydropower plants, has reported 7M19 water levels are only equivalent to 59% of the multiyear average.
Input constraints remains at NT2. POW reported that Vung Ang input issues have been slightly eased as the main supplier (TKV) has committed to supply sufficient coal. In contrast, NT2 could not run at full capacity due to upstream maintenance at the Cuu Long gas fields affecting the gas input. As mentioned in our NT2 initiation report, gas issues will only be resolved in 2021 after Sao Vang Dai Nguyet delivers its first gas.
We reiterate BUY with target price of VND 17,457. Our target implies 2019E PE of 16.2x and 2020E PE of 12.7x, which we view as reasonable.
Please access the link for our complete report: 20191017 POW 9M prelim
Analyst: Binh Truong, firstname.lastname@example.org