- 2024-01-30T00:00:00
- Company Research
REE released its Q4 2023 results with revenue of VND2.1tn (-33% YoY) and reported NPAT-MI of VND504bn (-30% YoY). The YoY decrease in the bottom line can be attributed primarily to a net loss from the M&E segment of VND76bn in Q4 2023 vs a net profit of VND39bn in Q4 2022. This is mainly due to a provision expense of ~VND200bn booked in Q4 2023. Additionally, earnings from the power segment dropped 20% YoY in Q4 2023 as many of REE’s hydropower plants recorded YoY decreases in NPAT last quarter, including the 52%-stake Vinh Son-Song Hinh Hydropower JSC (HOSE: VSH), the 60%-stake Thac Ba hydropower plant (HOSE: TBC), the 43%-stake Thac Mo hydropower plant (HOSE: TMP), and the 26%-stake Song Ba Ha Hydropower JSC (HOSE: SBH), whose respective NPAT fell 40% YoY, 55% YoY, 34% YoY, and 26% YoY.
In 2023, REE recorded revenue of VND8.6tn (-9% YoY) and reported NPAT-MI of VND2.2tn (-19% YoY), which are both equivalent to 89% of our respective full-year forecasts. We attribute the YoY decline in earnings to (1) M&E’s net loss of VND9bn in 2023 vs a net profit of VND131bn in 2022 and (2) a 21% YoY decrease in power earnings due to the weak performance of REE’s hydropower portfolio. Meanwhile, REE’s 2023 reported NPAT-MI trailed our projection due to lower-than-expected earnings from the real estate and M&E segments despite resilient performance of the power segment with its NPAT-MI completing 107% of our full-year forecast. We note that REE did not record any sales from the Light Square residential real estate project (Thai Binh province) vs our forecast of VND400bn in revenue and VND100bn in NPAT for 2023.
We foresee downside risk to our 2024F earnings projection, pending a fuller review, following weaker-than-expected 2023 results and the Ministry of Industry & Trade (MoIT)’s guidance (as per industry players) for a contracted volume ratio of 98% for hydropower in 2024 vs 90% in previous years. We currently forecast 2024F revenue of VND10.2tn and reported NPAT-MI of VND2,661bn.
REE’s Q4 & 2023 results
VND bn | Q4 2022 | Q4 2023 | YoY | 2022 | 2023 | YoY | % of our 2023F |
Net Revenue | 3,070 | 2,065 | -33% | 9,372 | 8,570 | -9% | 89% |
M&E | 1,159 | 573 | -51% | 2,816 | 2,653 | -6% | 86% |
Office leasing & real estate | 263 | 248 | -6% | 1,037 | 1,049 | 1% | 65% |
Power | 1,557 | 1,237 | -21% | 5,365 | 4,801 | -11% | 101% |
Water | 90 | 8 | -91% | 154 | 67 | -57% | 43% |
Reported NPAT-MI | 719 | 504 | -30% | 2,690 | 2,188 | -19% | 89% |
M&E | 39 | -76 | N.M. | 131 | -9 | -107% | N.M. |
Office leasing & real estate | 116 | 141 | 21% | 579 | 562 | -3% | 66% |
Power | 482 | 384 | -20% | 1,666 | 1,315 | -21% | 107% |
Water | 91 | 62 | -32% | 339 | 324 | -4% | 95% |
Other | -10 | -7 | -35% | -25 | -4 | -83% | 7% |
Source: REE, Vietcap
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