BWE - Results slightly weaker than expected; M&A continues - Earnings Flash
  • 2023-10-25T00:00:00
  • Company Research

- BWE released its Q3 2023 results with revenue of VND840bn (USD34.4mn; -2% YoY) and reported NPAT-MI of VND177bn (USD7.3mn; -10% YoY). In Q3 2023, the waste treatment segment recorded a minimal core NPAT, while the wastewater treatment segment experienced a net loss. Additionally, interest expenses increased by 74% YoY. These factors outweighed the resilient water segment. Despite having nearly flat YoY water sales volume, the water segment saw a 14% YoY increase in gross profit. The poor performance of the waste treatment and wastewater treatment segments was due to abnormally high costs recognized in Q3 as BWE deferred the costs of some raw materials in previous months to be recorded in Q3. We note that BWE recorded 2022 dividend income of VND29bn (USD1.2mn) from Dong Nai Water Supply JSC (UPCoM: DNW) in September.

- In 9M 2023, BWE recorded revenue of VND2,398bn (USD98.3mn; -2% YoY) and reported NPAT-MI of VND527bn (USD21.6mn; -9% YoY), which fulfilled 67% and 73% of our respective full-year forecasts. According to BWE, VND111bn (USD4.5mn) of revenue from the waste treatment segment was not recorded in 9M 2023 results due to incomplete paperwork. Reported NPAT-MI dropped 9% YoY as interest expenses surging 76% YoY, core NPAT from the waste treatment segment falling 14% YoY and a minimal loss of VND1bn from the wastewater treatment segment outweighed water sales volume rising 1% YoY and financial income increasing 30% YoY.

- BWE’s 9M 2023 water sales volume increased 1% YoY to 137 million cbm, completing 73% of our full-year volume forecast (188 million cbm; +3.5% YoY), which was slightly lower than our expectations.

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