We raise our target price (TP) for NT2 by 6% to VND33,000/share and maintain our BUY rating as we increase our DPS forecasts by 17% to VND3,500 for each year from 2023-2027. However, we broadly maintain our aggregate 2023-2027F adjusted NPAT forecast.

We forecast 2023F adjusted NPAT to increase 21% YoY with less competition from hydropower, which will support 10% YoY volume growth after a strong 27% YoY volume recovery in 2022. In addition, we forecast stronger competitive generation market (CGM) prices to offset higher gas prices. The CGM price in 2M 2023 was VND1,692/kWh (+21% YoY).

With a debt-free balance sheet, we project NT2 will deliver higher dividend yields (12.1% for 2023). As of December 31, 2022, NT2 had ~VND1.4tn of cash on hand available for dividend payment. We forecast five-year averages of VND1.7tn of cash flow from operating activities (CFO) and VND1.4tn of free cash flow to the firm (FCFF).