- POW released Q2 2021 results with reported NPAT-MI growing 16% YoY to VND876bn (USD38mn) mainly thanks to a VND293bn (USD13mn) gain from divesting PV Machino (UPCoM: PVM), an absence of a VND286bn (USD12mn) bad debt provision booked in Q2 2020, and lower net interest expenses thanks to its fast-tracked debt repayments.
- The above positive developments were partly offset by VND126bn (USD5mn) of expenses related to a technical incident at the Vung Ang 1 coal-fired power plant and VND16bn of (USD700,000) of FX losses in Q2 2021 vs VND136bn (USD6mn) of FX gains in Q2 2020.
- If adjusted for FX gains/losses, divestment gain and provision expenses, POW’s adjusted NPAT-MI would have declined 29% YoY to VND661bn (USD29mn) in Q2 2021 mainly due to the underperformance of POW’s gas-fired power portfolio and the added cost at the Vung Ang coal-fired power plant (despite the fact that this plant had a resilient sales volume).
- POW’s H1 2021 reported NPAT-MI grew 16% YoY to VND1.4tn (USD60mn) and completed 60% of our full-year forecast. Meanwhile, POW’s H1 2021 adjusted NPAT-MI was VND1.2tn (USD50mn) and completed 59% of our full-year forecast. These results were broadly in line with our expectation as we expect downside risk for NT2’s gas-fired power plant sales volume (see our July 27, 2021 NT2 Update Report) will be offset by upside risk from Vung Ang 1’s sales volume, pending for a fuller review.
- We note that POW could potentially reverse VND780bn (USD34mn) of provision expenses after collecting all bad debt from EVN when the Ca Mau PPA is finalized, which implies upside risk to our forecast.

POW’s sales volume declined 13% YoY to 9.4 billion kWh in H1 2021. Due to lower contracted volume, unattractive industry CGM prices and rising gas costs, Nhon Trach 1 and NT2’s sales volumes plunged 62% and 22% in H1 2021, respectively. In addition, the Vung Ang 1 plant recorded a 2% YoY volume decline in H1 2021, which we believe was resilient against an overall 4% volume decline of coal-fired power plants in Vietnam in H1 2021. In contrast, thanks to more favorable weather conditions, the Hua Na and Dakdrinh hydropower plants recorded significant volume growth of 64% YoY and 88% YoY, respectively. 

Other short-term payables to EVN disappeared in Q2 2021, which could imply positive bad debt collection progress. In Q4 2020, EVN transferred VND661bn (USD27mn) to POW in order to pay back part of its bad debt related to the capacity revenue at the Ca Mau gas-fired power plants. However, per POW, as EVN did not explicitly state that this payment was made to repay bad debt, POW’s accountant could not deduct this amount from POW’s bad debt balance. Instead, this amount was recorded under “other payables” on the balance sheet. In Q1 2021, this item increased to VND1.3tn (USD56mn) but then disappeared in Q2 2021. We believe this is a positive development as the company could have gained the necessary paperwork to convince its auditors to classify these payments for bad debt; therefore, we continue to expect that there will be no additional bad debt provisions from 2021F onward.