• PPC released its Q4 2023 results with revenue of VND1.7tn (+2% YoY) and reported NPAT of VND148bn (-23% YoY). We attribute the decrease in reported NPAT due to (1) PPC booking repair costs for the S6 generator of Pha Lai 2, and (2) YoY higher labor costs, which outweigh (3) 24% YoY higher sales volume thanks to the re-operation of the S6 generator from September 2023, and (4) the 8x surge in dividend income.
• For the full-year 2023, PPC’s revenue was VND5.8tn (+10% YoY) and reported NPAT was VND434bn (-11% YoY), which are equivalent to 102% and 121% of our respective 2023 forecasts. We also note that the actual reported NPAT is 2.5x higher than the preliminary number announced previously. However, this NPAT was largely supported by a higher-than-expected financial income of VND537bn (+101% YoY; equivalent to 175% of our full-year forecast), while the gross profit was VND5bn (-99% YoY; equivalent to 3% of our full-year forecast). While we await the audited financial statements to have a fuller review about abnormal high financial income, we foresee insignificant change to our 2024F NPAT forecast.

We expect insignificant change in our 2024 projected dividend income from QTP and HND to PPC despite HND’s 2023 NPAT trailing our forecast. QTP and HND, in which PPC holds 16% and 27% stakes respectively, announced further cash dividends, following their interim 2023 cash dividends (VND750/share and VND400/share), of VND286/share and VND552/share, respectively, to be paid in Jan 2024. The source of these further cash dividends is the reallocation of 50% of the companies’ development funds as of end Q3 2023 to retained earnings.

HND (PPC’s 27%-stake associate company) reports 2023 NPAT-MI completing 72% of our forecast. HND reported its Q4 2023 revenue of VND2.6tn (+17% YoY), and a loss in NPAT-MI of VND115bn compared to a loss of VND32bn in Q4 2022. We attribute the higher loss in Q4 2023 NPAT-MI mainly due to (1) HND booking major maintenance costs for the S1 generator in December 2023, which outweighs (2) the decrease in average material costs following the cheaper thermal coal prices. For full-year 2023, HND achieved revenue of VND11.4tn (+9% YoY) and NPAT-MI of VND418bn (-24% YoY), which are equivalent to 105% and 72% of our respective full-year forecasts.

QTP (PPC’s 16%-stake associate company) reports 2023 NPAT-MI completing 105% of our forecast. QTP reported its Q4 2023 revenue of VND2.8tn (+26% YoY) and reported NPAT-MI of VND211bn (11.6x higher YoY). We attribute the YoY surge in Q4 2023 NPAT-MI mainly due to (1) a 37% YoY increase in sales volume, coupled with (2) an 11% YoY decrease in average material costs, following the cheaper thermal coal prices. For the full-year 2023, QTP achieved revenue of VND12.1tn (+16% YoY) and reported NPAT-MI of VND614bn (-20% YoY), which are equivalent to 97% and 105% of our full-year forecasts, respectively.

We forecast mixed coal prices to decrease 6% YoY in 2024, which implies a lower average material cost for Vietnam’s thermal power plants, such as PPC, QTP, and HND. In 2023, the average price of Newcastle thermal coal, a benchmark for imported thermal coal, dropped by 47% YoY to USD183/tonnes. For Q4 2023, the average price of Newcastle thermal coal was USD136/tonnes (-64% YoY; -6% QoQ). We estimate the average material cost of PPC and QTP to decline by 21% YoY (-10% QoQ) and 11% YoY (-1% QoQ) in Q4 2023, respectively. 

PPC’s 2023 results

Source: PPC, Vietcap

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