• We attended NT2’s annual general meeting (AGM) on May 29, 2024. Overall, management is confident in making no loss in 2024 following strong preliminary Q2 results vs our forecasted full-year net loss of VND116bn. 
• NT2 set 2024 guidance with revenue of VND6,340bn (-1% YoY) and NPAT of VND68bn (-86% YoY) vs our 2024 projection of a loss at VND116bn. The difference in NT2 profit guidance vs our loss forecast is mainly due to its aggressive sales volume guidance of 3.2 billion kWh (+11% YoY), achieving 155% of our full-year forecast. 
• NT2 guides for an FX loss compensation of  VND177bn to be received in 2024 within our expectation. NT2 also expects to record a revenue of VND89bn in 2024 from forest environmental service fees during 2019 to 2023, posing upside potential to our 2024F earnings forecast.
• NT2 announced its strong preliminary Q2 2024 sales volume of 1,021 million kWh (-3% YoY) and PBT of VND159bn (+1% YoY) following the 3.0x higher National Load & Dispatch Center’s (NLDC) mobilization plan of 1,008 million kWh vs the old plan of 315 million kWh. Accordingly, NT2 expects to go break-even in H1 2024 with sales volume of 1,173 million kWh. NT2’s management also expects a high sales volume in Q4 to make up for an expected Q3 loss to achieve its 2024F guided NPAT of VND68bn. We note that NT2 has not received NLDC’s new mobilization plan for H2 2024. 
• Shareholders approved to pay 2023 dividends at VND1,500/share – in line with our forecast, with the first tranche of cash dividends of VND700/share has been paid on March 29, 2024. Additionally, shareholders approved no dividends payment for 2024 vs our forecast of VND1,000.
• We see potential upside risks to our 2024F earnings forecast due to the VND89bn revenue from forest environmental service fees and NLDC’s higher mobilization for NT2 in Q2, pending a fuller review.

NT2 ensures sufficient supply from GAS. In its AGM, management disclosed the annual committed gas volume from GAS of 784 million cubic meters per annum until 2036. Despite the depleting domestic gas supply in the southeast region, the expired take-or-pay committed gas supply to Phu My 3 and Phu My 2.2 in 2024 and 2025 will ensure sufficient gas supply for NT2 as per signed GSA with GAS. With the sufficient gas supply, NT2 expects 2025F sales volume to return to its 10-year average of 4 billion kWh, which is in line with our forecast, ensuring the turnaround of NT2 in 2025.

NT2 is confident to compete with almost all new gas/LNG-fired power plants in the competitive generation market due to lower gas cost despite lower efficiency. NT2’s gas input price is ~22% lower than that of new gas/LNG-fired power plants due to the cheaper domestic gas supply (USD9.3/MMBTU) to NT2 vs the expensive LNG gas price (~USD12/MMBTU), per NT2’s management. Additionally, in case NT2 uses mixed gas of domestic natural gas and imported LNG (which is considered by the MoIT), which still help maintain the low cost advantage for NT2 as the LNG price mechanism is applied similarly to NT2 and new gas/LNG-fired power plants.

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