• REE released its Q1 2024 results with revenue of VND1.8tn (-22% YoY) and reported NPAT-MI of VND480bn (-36% YoY). The YoY decrease in the bottom line can be attributed primarily to the plunging earnings from the power and water segments by 52%/39%, respectively. These lower power earnings are due to the significantly lower contribution from hydropower, which outweighed higher earnings from thermal power plants. 
• REE’s Q1 2024 revenue and NPAT-MI were in line with our expectations as they completed 20% and 21% of our respective full-year forecasts. We expect REE recognizing revenue from Etown-6 from Q2 2024, sales of 45 low-rise units at The Light Square in late 2024, as well as the futher recovery of the M&E segment toward the year’s end, to complete our full-year earnings forecast.
• We see insignificant changes to our 2024 earnings forecast, target price, and rating as seen in our recent update, “Additional power capacity to fuel earnings growth.”

Power NPAT-MI plunged by 52% YoY to VND238bn as weaker earnings from hydropower outweighed stronger earnings from thermal power plants. Specifically, the earnings contribution from the 53%-stake Vinh Son Song Hinh Hydropower JSC (HOSE: VSH) decreased by VND235bn (equivalent to a 100% decline YoY). Meanwhile, Pha Lai Thermal JSC (HOSE: PPC) increased its contribution to REE’s power segment NPAT-MI by VND28bn, which is negligible to VSH’s lower contribution. 

Water NPAT-MI decreased by 39% YoY to VND67bn in Q1 2024, mainly due to the loss from Song Da water due to a heavy depreciation expense of doubling its capacity, resulting in VND18bn lower contribution to REE’s Q1 NPAT-MI.

M&E revenue stayed flat YoY and NPAT-MI surged by 48% YoY from 2023’s low base, completing 20%/17% of our respective full-year forecastsforecast. We maintain our view that M&E will further recover in the upcoming quarters to meet our full-year forecast. 

Office leasing & real estate revenue and NPAT-MI were mostly flat YoY, fulfilling 12%/15% of our respective full-year forecasts. We maintain our expectations that REE will recognize earnings from E-town 6 from Q2 and to record revenue of VND1tn from the sales of 45 low-rise units in The Light Square residential real estate project in late 2024, to complete our full-year projection.

REE’s Q1 2024 results 

Source: REE, Vietcap

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