• 29 shareholders (representing 86.29% of total voting rights) attended QTP’s AGM on April 27.
• Shareholders approved 2024 guidance for revenue of VND12.3tn (+2% YoY) and PBT of VND555n (-14% YoY, 60% of our 2024F NPAT forecast). We attribute this to management’s caution as QTP’s actual PBT beat its guidance by 2x over the past five years. In addition, Q1 2024 NPAT was VND227bn (+57% YoY, completing 27% of our full-year forecast, VND830bn, +57% YoY).
• Shareholders approved 2023 cash dividends of VND1,500/share and 2024 cash dividends of VND1,000/share. We currently forecast cash dividends of VND1,886/share and VND1,800/share for 2023 and 2024, respectively. Historically, QTP paid cash dividends for 2021/2022/2023 higher than its guidance by 60%/125%/50%, respectively.
• Management views lower contracted volume as an opportunity due to QTP having a low-cost competitive advantage, which supports QTP to have good profit in the CGM market.
• Our view: We see potential upside to our earnings forecast for QTP in 2025-2028 due to a 5% higher-than-expected fixed component in its PPA contract. However, we see insignificant change to our 2024 earnings forecast due to higher-than-expected major maintenance expenses, which might offset the lower-than-expected depreciation expenses and a higher-than-expected fixed component in PPA.

Conservative 2024 guidance with PBT decreasing 14% YoY, despite the top line guided to increase 2% YoY. 

• QTP guides for 2024 revenue of VND12.3tn (+2% vs actual 2023; +3% vs 2023 guidance), and PBT of VND555bn (-14% vs actual 2023; +20% vs 2023 guidance), which are equivalent to 100% and 60% of our respective forecasts. We attribute this to management’s caution in estimating costs. In 2019-2023, QTP’s actual PBT was 2x its guidance on average. 
• This revenue guidance fulfills our forecast despite the sales guidance of 7.0 billion kWh (-1% vs actual 2023; +3% 2023 guidance), only equivalent to 98% of our forecast. This implies that QTP’s management estimates an average selling price higher than our current projection. We attribute this to our underestimating QTP’s fixed component in the PPA contract, as we estimate the PPA’s fixed component to decrease by 5% YoY.

Dividend and fund allocation:

• 2023 cash dividend: QTP raises its 2023 cash dividend to VND1,500/share from VND1,000/share. This is lower than our current projection of VND1,886/share. To date, QTP has paid in advance the 2023 cash dividend of VND1,036/share (including VND750/share by using 2023 retained earnings and VND286/share by re-allocating its development and investment fund). This implies the remaining 2023 cash dividend to be VND464/share. 
• 2024 cash dividend: QTP plans to pay 2024 cash dividend of VND1,000/share. This is lower than our projection of VND1,800/share. Historically, QTP paid cash dividends for 2021/2022/2023 higher than its guidance by 60%/125%/50%, respectively.

QTP’s fixed component in the PPA contract remains at VND357/kWh, 5% higher than our current projection. Our latest report projects a 5% decrease in QTP’s fixed component to VND339/kWh due to concerns about EVN’s financial difficulties that may affect QTP’s negotiating power. However, management confirmed that the fixed component remains unchanged at VND357/kWh for the project’s lifecycle due to QTP’s contract signed under Circular 41/2010, which does not require negotiation to change the fixed component.

Management views lower contracted volume as an opportunity. Despite the Ministry of Industry & Trade’s Decision 158 (dated December 29, 2023), which guides for a reduction in contracted volume ratios for thermal power plants from 80% (2023) to 70% (2024), QTP sees this as an opportunity. Their low-cost competitive advantage is supported by (1) QTP benefiting from its proximity to coal reserves, minimizing transportation costs, and (2) the current downward trend in coal prices further reducing production costs, coupled with (3) depreciation expenses expected to decrease by 33% this year. Combined together, these factors allow QTP to receive good profit in the CGM market, mitigating the impact of lower contracted volume.

Management guides lower-than-expected 2024 depreciation expenses of VND568bn (-35% vs actual 2023; 5% lower than our current projection of VND600bn). 

However, they guide for a YoY increase in 2024 maintenance and other expenses, which is higher than our current forecast. This higher maintenance cost reflects deferred work from 2023. Equipment repairs originally planned for last year were incomplete and have been pushed into 2024, resulting in a higher-than-usual maintenance budget. In 2023, maintenance & other expenses were VND460bn, while we currently forecast 2024 maintenance & other expenses to be VND376bn. Additionally, QTP shared that the total FX loss compensation was VND1.6tn, which they have already received VND1.0tn in recent years and the remaining VND600bn to be received over the next few years. This is higher than our anticipation of VND500bn.

QTP and EVN are finalizing investment costs for the Quang Ninh 2 thermal power plant. While settlement documents await EVN approval (expected completion in 2024), QTP anticipates this process will not impact current operations or selling prices under existing contracts. 

Management change: Mr. Ngo Sinh Nghia transitions to EVNGENCO1. QTP's CEO, Mr. Ngo Sinh Nghia, will be stepping down on May 1, 2024, to assume a deputy director position at EVNGENCO1 (the largest shareholder of QTP with 42% ownership). Mr. Nguyen Viet Dung, a Board member representing EVNGENCO1 (joined in 2020) and current deputy CEO, will take over as acting CEO. However, Mr. Ngo Sinh Nghia will remain on the QTP Board of Directors and maintain his commitment to supporting and overseeing the company's strategy.

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