* On November 15, 2024, we attended POW’s site visit for its Nhon Trach 1, 2, 3 & 4 power plants in Dong Nai Province. Management shared a positive outlook for 2025F, aligning with our projection for 31% YoY growth in core NPAT-MI. The PPA for NT 3 & 4 regarding contracted volume and the PPA fixed component are broadly in line with our forecasts.

* POW disclosed its 10M and full-year 2024 PBT results of VND1,353bn and VND1,095bn (110% of its guidance), completing 90%/72% of our respective full-year forecasts. We maintain our 2024F PBT forecast of VND1,511bn vs POW’s conservative target due to (1) strong 10M PBT and (2) the company’s target potentially not accounting for insurance compensation from Vung Ang (POW guided that it received VND600bn with the remaining VND400bn is to be received in Q1 2025) vs our expected recognition of VND300/700bn in 2024/25F. 

 * POW’s management shared their outlook for 2025 as follows:

+ Sales volume: 19 billion kWh (+14% YoY vs 2024’s guidance, +20% growth vs our 2024 forecast), equivalent to 92% of our 2025F forecast. This strong volume growth should be driven by strong contributions from the Ca Mau 1 & 2, Vung Ang, and NT2 plants, while they expect more favorable contracted volume (i.e. higher YoY).

+ Nhon Trach 1 & 2: In 2025F, NT2 will have sufficient 100% domestic gas supply, as EVN has no plans to mobilize Phu My 2.2 and 3 (BOT plants with expired gas sales agreements (GSA)). Additionally, NT1 plans to use LNG or diesel oil (DO).

 + Nhon Trach 3 & 4: 

-    Commercial operations are scheduled to begin in June/September 2025, aligning with our projections. The 500kV transmission line is set to energize on November 29, 2024, enabling test runs. Equipment is ready, and road construction is ongoing. A positive volume was asigned for 2025.

-    The PPA has been signed with Qc of 70% (35% for half-year operation in 2025) and the PPA fixed component is similar to NT2 (VND460/kWh), broadly in line with our forecast. The PPA ensures 40% of designed capacity in the short term, per POW’s CEO, and we expect capacity to be higher in the long run. The company plans to sign the GSA in December 2024 (GSA for the test run was signed in November).

-    In May 2024, managementsexpected the PPA to deliver an IRR of 10%, with 14-year payback, and minimal losses in the first two years of operation. We project NT 3 & 4 to contribute 11% to POW’s NPAT-MI in 2028F. 

-    A mechanism for LNG-fired power plants is expected to be approved in 2025. We expect LNG prices to decrease in the long term with cheaper sourcing from the US compared to Japan and Qatar, which is in line with our forecast. 

+ Ca Mau 1 & 2: PetroVietnam aims to fully utilize gas allocation from the PM3 gas field in 2025, which may result in slightly higher-than-expected sales volume vs our forecast.

+ Hydropower: Completion of the Nam Non hydropower plant acquisition (20 MW) is scheduled by December 2024, with consolidation into Q4 2024 results. Carbon credits from hydropower for 2024 sales were sold for USD130k (~0.2% of POW’s PBT).

* We see insignificant changes to our 2025F NPAT-MI forecast, which is in line with management’s positive outlook, pending a fuller review. We currently have a MARKET PERFORM rating for POW with a target price of VND12,600/share.

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