BWE - FX loss to weigh on reported earnings, core NPAT grows 10% YoY - Earnings Flash
  • 2024-07-26T00:00:00
  • Company Research
  • BWE announced its Q2 2024 results with parent sales volume of 52 million cubic meters (+10.2% YoY); revenue of VND1,034bn (USD40.8mn; +18% YoY) and reported NPAT-MI of VND134bn (USD5.3mn; -36% YoY, mainly due to forex loss). 
  • For H1 2024, BWE’s parent sales volume was 99 million cubic meters (+9.5% YoY; 50% of our 2024F), while revenue was VND1,826bn (USD72mn; +17% YoY) and reported NPAT-MI was VND313bn (USD12.3mn; -10.6% YoY). These results complete 46% and 41% of our respective full-year forecasts. 
  • Excluding the impact of forex loss, BWE’s core NPAT for the first half of 2024 was VND393bn (USD15.5mn; +10.4% YoY; 46% of our 2024F). This is roughly in line with our forecast as (1) the current revenue and NPAT has not included the VND214bn unrecorded portion from the wastewater and waste treatment segments and (2) we expect FY2024’s interest expense YoY growth to be lower in 2H2024 due to the refinancing loan activity for the some high-interest rate loans.
  • Strong H1 2024 revenue growth was mainly contributed to by ~10% sales volume growth in Binh Duong Province and the contribution of Biwase Long An. However, reported NPAT-MI suffered negative growth due to (1) a higher COGS growth of 21% YoY, (2) 65% YoY higher financial expenses, which we attribute to 6.6% higher outstanding loans (VND5,327bn; USD210mn) and a ~15x YoY higher FX loss from USD-denominated loans following a ~4.3% appreciation of the USD against the VND, and (3) an 80% decrease in shared profit from associates, which was dampened by a loss from Gia Tan Water – BWE’s associate.
  • Overall, we see insignificant change to our recent forecasts. See more in our latest Water Sector Update, dated June 27, 2024.
  • We currently have an OUTPERFORM rating for BWE with a target price of VND48,500/share.

BWE’s H1 2024 results

 VND bn 

(unless stated) 

Q2 2023 

Q2 2024 

YoY 

H1 2023 

H1 2024 

YoY 

% of Vietcap’s 2024F 

Water sales volume (million cbm) 

47

52

10.2%

91

99

9.5%

50%

Revenue  

877

1,034

18.0%

1,558

1,826

17.2%

46%

Water supply & distribution 

582

701

20.4%

1,102

1,328

20.5%

52%

Waste treatment 

166

146

-12.1%

235

236

0.8%

32%

Wastewater treatment 

35

-3

-108.0%

58

0

-99.2%

0%

Trading & others 

94

190

102.1%

163

261

59.8%

52%

COGS 

-494

-623

26.1%

-842

-1,023

21.4%

46%

Gross profit 

383

411

7.4%

715

803

12.3%

47%

Water supply 

319

404

26.7%

624

763

22.1%

53%

Waste treatment 

23

1

-93.9%

33

12

-65.0%

8%

Wastewater treatment 

7

1

-83.4%

11

-1

-108.9%

-2%

Trading & others 

34

5

-86.4%

47

30

-35.4%

33%

SG&A expenses 

-137

-157

14.5%

-263

-297

12.9%

49%

Operating profit 

246

254

3.4%

452

506

12.0%

45%

Financial income 

17

40

135.1%

63

63

0.3%

52%

Financial expenses 

-61

-137

123.7%

-135

-222

65.0%

52%

In which: Interest expenses 

-57

-65

15.5%

-130

-147

13.2%

43%

In which: FX loss 

-5

-72

1413.2%

-5

-75

1476.5%

93%

Shared profit from associates 

28

-5

N.M.

7

1

-80.3%

4%

Other income/loss 

4

3

-18.9%

4

5

16.6%

N.M

Profit before tax 

234

155

-33.5%

392

354

-9.7%

42%

Income tax expense 

-23

-18

-24.6%

-41

-36

-12.4%

46%

NPAT before MI 

210

138

-34.4%

351

318

-9.4%

41%

Minority interest 

-1

-4

N.M.

-1

-5

N.M.

54%

Reported NPAT-MI 

209

134

-36.2%

350

313

-10.6%

41%

Core NPAT breakdown, excluding FX loss and one-off

215

210

-2.3%

355

393

10.4%

46%

 Water supply 

152

142

-6.7%

286

311

8.8%

54%

Waste treatment 

6

1

-76.7%

7

3

-58.3%

7%

Wastewater treatment 

1

-5

N.M.

2

-10

N.M.

N.M.

Trading & Others 

56

71

28.1%

60

89

46.8%

42%

Source: BWE, Vietcap

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