- PC1 released Q2 2023 results with revenue of VND1.5tn (-3% YoY) and a reported net loss of VND26bn (vs net profit of VND63bn in Q2 2022). We attribute the plunge in earnings to (1) a 63% YoY decline in gross profit from the power generation segment due to unfavorable weather conditions for hydropower and (2) higher selling, general & administrative expenses and financial expenses (interest expense jumped 54% YoY in Q2 2023), which outweighed higher gross profit from the power construction and electric steel pole manufacturing segments, in addition to the contribution from the industrial park (IP) segment (i.e., 70%-stake Nomura IP). 

- We foresee potential downside risk to our 2023F NPAT-MI forecast for PC1, pending a fuller review. In H1 2023, PC1’s revenue was nearly VND3.0tn (-1% YoY), completing 36% of our full-year projection. Meanwhile, the company recorded a net loss of VND11bn in H1 2023 vs our forecast for 2023F NPAT-MI of VND500bn. We foresee potential upside to our 2023F financial expenses forecast, pending a fuller review, as the H1 2023 result completed 53% of our full-year forecast.

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