QTP [OUTPERFORM +13.2%] - Capitalizing on northern Vietnam’s robust power demand

- We initiate coverage on QTP with an OUTPERFORM rating and a target price of VND16,300/share. Our recommendation is based on: (1) a young coal-fired power plant with high-quality Chinese turbines, favourable investment cost and excellent availability; (2) its strategic location to meet the robust electricity demand in northern Vietnam, and (3) expected reductions in debt and depreciation expenses, facilitating higher dividend payouts.

- We project 2024 reported NPAT-MI to increase by 35% YoY to VND830bn, propelled by (1) a 7% YoY drop in material costs due to lower coal prices, (2) an anticipated VND300bn reduction in depreciation expenses, outweighing a 5% YoY decrease in the PPA’s fixed component (due to EVN's financial concerns, despite stable fixed component as per management guidance).

- We project a 16% EPS CAGR in 2023-26F, driven by (1) a sustainable high utilization rate of 68-75%, (2) a lower depreciation expense, (3) higher CGM prices, and (4) declining coal costs.