PPC - H1 2024 core profit reaches 2x YoY, slightly trails expectations due to Pha Lai 1’s lower-than-expected fixed component - Earnings Flash
  • 2024-07-16T00:00:00
  • Company Research
  • PPC released its Q2 2024 results with revenue of VND2.5tn (+77% YoY) and reported NPAT-MI of VND93bn (-42% YoY). We attribute this lower YoY NPAT-MI to (1) a 6% YoY lower average selling price driven by a YoY decrease in Pha Lai 1’s fixed component in its PPA contract (which we wrote in PPC’s AGM notes) and (2) 82% YoY lower dividend income. These outweigh the (3) 89% YoY higher sales volume following the reoperation of its S6 generators and (4) a 5% YoY lower average material cost following the YoY lower coal price.
  • For H1 2024, revenue was VND4.5tn (+65% YoY) and reported NPAT-MI was VND251bn (+25% YoY). We attribute this YoY higher NPAT-MI to (1) 77% YoY higher sales volume and (2) a 5% YoY lower average material cost, which outweigh the (3) Pha Lai 1’s YoY lower fixed component. 
  • H1 2024 results are slightly below our expectations, completing 62% and 36% of our 2024 revenue and reported NPAT-MI forecasts, respectively. We foresee slight downside risk to our earnings forecast, pending a fuller review. This is due to (1) Pha Lai 1’s lower-than-expected fixed component, coupled with (2) higher-than-expected volume from Pha Lai 1, which implies a higher loss due to a higher heat rate, requiring more coal to produce the same amount of electricity and increases the average material cost. In its 2024 AGM, PPC shared its 5M 2024 production volume breakdown of Pha Lai 1’s production volume of 500 million kWh (93% of our full-year forecast, above our expectation) and Pha Lai 2’s production volume of 1,700 million kWh (43% of our full-year forecast, in line with our expectation).

HND’s (PPC’s 27%-stake associate company) H1 2024 NPAT-MI completed 48% of our full-year forecast, roughly in line with our expectation. HND release its Q2 2024 results with revenue of VND3.5tn (+3% YoY) and NPAT-MI of VND276bn (-17% YoY). The YoY decrease in Q2 NPAT-MI is due to (1) the underbooking of maintenance expenses and other expenses in Q2 2023, together with (2) a YoY higher average material cost due to a high heat rate, which outweigh (3) the decrease in depreciation expense YoY in Q2 2024. For H1 2024, HND's revenue was VND6.2tn (+5% YoY) and reported NPAT-MI was VND431bn (+26% YoY), completing 58% and 48% of our full-year forecasts, respectively and coming in line with our expectations. We foresee insignificant changes to our HND's earnings forecast, pending a fuller review.

PPC’s H1 2024 results

VND bn

Q2

2023

Q2

2024

YoY
 %

H1

2023

H1

2024

YoY
 %

% of Vietcap’s 2024F

Sales volume (million kWh)

704

1,330

89%

1,357

2,400

77%

58%

Price spread (VND/kWh)

268

232

-13%

294

241

-18%

66%

ASP (VND/kWh)

1,985

1,857

-6%

1,995

1,860

-7%

107%

Average material cost (VND/kWh)

1,717

1,625

-5%

1,701

1,620

-5%

117%

Revenue

1,397

2,469

77%

2,708

4,465

65%

62%

     COGS

-1,301

-2,341

80%

-2,588

-4,242

64%

65%

     - In which, maintenance & other expenses

-28

-110

293%

-152

-211

39%

53%

Gross Profit

96

128

33%

119

223

87%

34%

     G&A

-23

-33

40%

-47

-64

37%

49%

Operating profit (EBIT)

73

95

30%

73

159

118%

N.M.

Net interest income

6

-2

-125%

9

-1

-108%

-18%

Dividend income

100

18

-82%

137

113

-17%

42%

Others

0

0

N.M.

0

0

36%

N.M.

PBT

179

112

-37%

219

271

24%

34%

     Income tax exp

-18

-18

5%

-18

-21

17%

19%

Reported NPAT

161

93

-42%

201

251

25%

36%

NPAT from power generation *

61

75

22%

65

138

114%

33%

Source: PPC, Vietcap (*Vietcap estimate NPAT from power generation = Reported NPAT - Dividend income)

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