- We reinitiate coverage of GEX with a BUY rating and TP of VND24,600. GEX has a track record of aggressive growth via M&A. It restructured dominant players in Vietnam’s electrical equipment industry into its 80%-stake subsidiary (UPCoM: GEE) and consolidated Viglacera (HSX: VGC) — the second largest industrial park (IP) developer in northern Vietnam. We project electricity consumption growth of 9% p.a. and doubling/tripling in national/renewable power capacity by 2030F, driving demand for electrical equipment. A cyclical recovery in real estate and structural growth in Vietnam’s urban population should fuel demand for housing, thus increasing demand for construction materials and electric cables. We also expect strong FDI inflows as global manufacturers move to Vietnam, which should lead to higher demand for IPs.

- We forecast 2023F NPAT-MI to rise by 14% to VND420bn mainly due to lower investment losses from GEX’s parent company. For 2024F, we project GEX’s NPAT-MI to rebound by 86% YoY due to (1) a 51% YoY jump in GEE’s NPAT-MI from improved demand for electrical equipment and higher utilization rates for its wind farms and (2) a 35% YoY increase in VGC’s NPAT-MI thanks to a recovery in construction material sales and stable earnings from IP leasing.

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