POW - Strong coal-fired plant performance, in line with expectation - Earnings Flash
  • 2024-07-30T00:00:00
  • Company Research
  • POW released its official Q2 2024 results with revenue of VND9.4tn (USD372mn; +12% YoY) and NPAT-MI of VND401bn (USD15.8mn; +218% YoY). POW’s Q2 revenue increased 12% YoY due to (1) an 11% YoY increase in sales volume and (2) a 1% YoY increase in ASP. The higher YoY output was driven primarily by higher sales volume from Vung Ang (+58% YoY) and Dakdrinh (+12% YoY), which outweigh the 55% YoY plunge from Nhon Trach 1. We attribute the 2x surge in NPAT-MI to (1) a 54% YoY increase in gross profit due to a lower cost per kWh, (2) a 13% decrease in G&A expenses, (3) nearly zero income tax expense, and (4) flat YoY minorities interest. These factors outweigh the 18.0x surge in FX loss.
  • Additionally, POW reported that its H1 2024 revenue was VND15.7tn (USD618mn; -1% YoY), and NPAT-MI was VND678bn (USD26.8mn; +3% YoY), fulfilling 48%/48% of our respective full-year forecasts. These results are in line with our current projections. Nearly flat revenue growth was due to (1) flat YoY sales volume growth, where the significant increase in sales volume of the Vung Ang power plant (+69% YoY) offset the output decline in Nhon Trach 1/NT2/Hua Na/Dakdrinh of -78%/-45%/-24%/-12% YoY, respectively, and (2) the almost flat ASP (-3% YoY). However, reported NPAT-MI still slightly increased 3% YoY due to (1) an 11% decrease in the G&A expense, (2) a 36% plunge in income tax expense, and (3) no minorities interest recorded vs VND171bnn in H1 2023. These factors outweigh the 20.0x surge in FX loss.
  • H1 adjusted/recurring NPAT-MI was strong, completing 57% of our full-year forecast, which we attribute primarily to the strong performance of the Vung Ang and Ca Mau power plants. We note that POW has not yet booked an insurance compensation for Vung Ang 1 vs our forecast of VND300bn in 2024.
  • Overall, we see insignificant changes to our 2024 NPAT-MI forecasts for POW, pending a fuller review. 
  • We currently have a MARKET PERFORM rating for POW with a target price of VND13,800/share.

Figure 1: POW's H1 2024 sales volume

million kWh

Q2 2023

Q2 2024

YoY

H1 2023

H1 2024

YoY

% of Vietcap’s 2024F

Output

4,338

4,825

11%

8,340

8,369

0%

50%

Ca Mau

1,695

1,639

-3%

3,098

3,110

0%

48%

Nhon Trach 1

227

103

-55%

489

106

-78%

11%

Nhon Trach 2

1,054

1,026

-3%

2,129

1,178

-45%

57%

Vung Ang

1,174

1,855

58%

2,107

3,563

69%

58%

Hua Na

81

82

2%

206

157

-24%

28%

Dakdrinh

107

120

12%

310

255

-18%

52%

Source: POW, Vietcap

 

Figure 2: POW’s H1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

H1 2023

H1 2024

YoY

% of Vietcap’s 2024F

Revenue

8,429

9,407

12%

15,854

15,650

-1%

48%

COGS

-7,960

-8,683

9%

-14,705

-14,549

-1%

48%

Gross profit

469

724

54%

1,148

1,101

-4%

47%

Selling exp

0

0

N.M.

0

0

N.M

N.M.

G&A

-207

-181

-13%

-334

-297

-11%

34%

Operating profit

262

543

107%

814

804

-1%

55%

Financial income

122

131

8%

246

232

-6%

37%

      Interest income

97

92

-5%

206

171

-17%

32%

      FX gains

-7

27

N.M

6

29

358%

N.M.

      Others

0

12

N.M.

34

31

-6%

35%

Financial expenses

-136

-229

69%

-276

-383

39%

39%

      Interest expense

-125

-98

-22%

-258

-178

-31%

29%

      FX loss

-7

-138

1881%

-10

-209

2023%

70%

      Others

-3

8

N.M

-8

4

N.M

N.M

Other non-operating income

-9

5

N.M

144

76

-47%

21%

PBT

239

451

89%

929

729

-22%

49%

  - Income tax exp

-58

-1

-99%

-98

-62

-36%

72%

NPAT before MI

181

450

148%

831

667

-20%

47%

  - Minority interests

-55

-50

N.M.

-171

12

N.M

149%

Reported NPAT-MI

126

401

218%

660

678

3%

48%

Adjusted NPAT-MI *

156

490

214%

562

768

37%

57%

Source: POW, Vietcap (* Excluding one-off items, compensation for FX loss and insurance)

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