- POW announced its Q2 2022 results with NPAT-MI of VND417bn (-51% YoY). Based on our discussion with POW’s investor relations team, we understand this NPAT figure also includes VND276bn that EVN Power Trading Company paid for last year’s FX loss (which is included in the revenue item). Therefore, adjusted NPAT in Q2 2022 is VND196bn (-69% YoY). This weak result is mainly due to volume plunging at the Ca Mau (-37% YoY) and Vung Ang (-57% YoY) plants, as well as a downward adjustment in contracted volume at the Ca Mau plant due to a gas shortage. 

- H1 2022 NPAT-MI was VND1,139bn (-16% YoY), completing 48% of our full-year forecast. Excluding one-off items, adjusted NPAT in H1 2022 is VND697bn, fulfilling 38% of our full-year projection. We see potential downside risk to our 2022 earnings forecast, pending a fuller review. Potential earnings decreases at the Vung Ang and Ca Mau plants and lower-than-expected interest income should outweigh potential earnings increases for NT2, Nhon Trach 1 and the hydropower portfolio. 

- According to POW, the risk of a gas shortage for the Ca Mau plant has eased as the company has finished negotiation to purchase more gas from Malaysia. Nevertheless, we believe that Ca Mau’s high gas price could weigh on its H2 2022 volume. In addition, POW also expects the Vung Ang plant to perform slightly better in H2 compared to H1 2022 because it has secured enough coal for this year and plans for Vung Ang’s volume to be 1.7 billion kWh — slightly higher than in H1 2022 but still lower than our expectation.

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