- We raise our target price (TP) for POW by 4.5% and maintain our OUTPERFORM rating. We view POW as a solid play on Vietnam’s resilient power consumption and structural transition to LNG with its upcoming Nhon Trach 3 & 4 LNG-fired plants.

- Our higher TP is mainly due to POW’s net cash balance of VND1.2tn at end-Q2 2023 vs net debt of VND1.0tn at end-Q1 2023, which outweighs a 1% decline in our estimated PV of FCF & TV that results from a 2% decrease in our aggregate 2023-2027F NPAT-MI forecast. 

- Our lower aggregate 2023-2027F NPAT-MI forecast is due to (1) our 7% and 4% lower earnings projections in 2023F and 2024F, respectively, as we increase COGS of Ca Mau and Nhon Trach 1 in 2023 to reflect higher-than expected expenses in H1 2023 and lower our assumed utilization rate for Ca Mau in 2024 from 62% to 58%, which is similar to the pre-COVID level; and (2) our 1% lower NPAT-MI forecast for 2025F-2027F mainly due to revising our VND depreciation assumption against the USD in 2023 from 0% to 1% (we maintain our assumption for a 0% VND depreciation against the USD from 2024 onward).

Powered by Froala Editor