- REE released Q2 2023 results with revenue of VND2.2tn (+7% YoY) and reported NPAT-MI of VND489bn (-18% YoY). We attribute the decrease in reported NPAT-MI mainly to (1) a 27% YoY decline in power earnings as most of REE’s hydropower portfolio recorded YoY decreases in NPAT in Q2 2023, including the 60%-stake Thac Ba hydropower plant (HOSE: TBC) and 24%-stake Central Hydropower JSC (HOSE: CHP) whose respective NPAT plunged by 72% YoY and 80% YoY, which outweighed respective 2% YoY and 146% YoY increases in the NPAT of 52%-stake Vinh Son-Song Hinh Hydropower JSC (HOSE: VSH) and 24%-stake Pha Lai Thermal Power JSC (HOSE: PPC); and (2) a 70% plunge in M&E earnings due to a slowdown of the construction sector.

- REE’s H1 2023 revenue and reported NPAT-MI were VND4.5tn (+12% YoY) and VND1.2tn (-4% YoY), completing 46% and 47% of our full-year forecasts, respectively. H1 2023 NPAT-MI from the power and office leasing & real estate segments was in line with our expectations, completing 50% and 33% of our respective full-year projections. We expect higher earnings for the office leasing & real estate segment in H2 2023 as REE plans to hand over units at the Bo Xuyen real estate project in Thai Binh Province in Q4 2023. H1 2023 NPAT-MI from the water segment was ahead of our forecast, but the result from the M&E segment trailed our projection. Overall, we do not foresee any material changes to our NPAT-MI forecast for REE, pending a fuller review.

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