- 2024-01-19T00:00:00
- Company Research
TDM announced its Q4 2023 results with revenue of VND192bn (+52% YoY) and NPAT-MI of VND43bn (-41% YoY). We note that TDM recorded VND59bn revenue from material sales in Q4 2023, leading to a strong revenue growth. Meanwhile, Q4 2023 NPAT-MI was weak mainly due to the YoY plunge in financial income and higher financial expenses YoY. TDM’s financial income fell 63% YoY in Q4 2023 due to TDM recording a lower amount of dividend income from Dong Nai Water JSC (HOSE: DNW) in Q4 2023 vs Q4 2022. Furthermore, TDM recorded VND19bn of provision expenses for its investments in Gia Tan Water Supply JSC, in which TDM holds a 22.73% stake, and Biwase Quang Binh JSC (formerly DNP Quang Binh Water Infrastructure Investment JSC), in which TDM holds a 43.77% stake.
In 2023, TDM recorded revenue of VND533bn (+11% YoY) and NPAT-MI of VND283bn (+29% YoY), which are equivalent to 110% and 100% of our respective forecasts. We attribute NPAT-MI growth to TDM recording 2022 dividend income of VND94bn from Binh Duong Water – Environment Corporation – JSC (HOSE: BWE) in Q1 2023 vs recording no dividend income from BWE in 2022.
We estimate NPAT from water generation to be VND171bn (-23% YoY) in 2023, which we attribute to 1) water sales volume decreasing 1% YoY and 2) 49% YoY higher financial expenses YoY. TDM’s 2023 water sales volume decreased 1% YoY to 68.4 million cbm, completing 99% of our volume forecast (69 million cbm; flat YoY). In 2023, TDM recorded VND24bn of provision expenses for its investment including VND18bn of provision expenses for its investment in Gia Tan Water Supply JSC and VND6bn for provision expenses for its investment in Biwase Quang Binh JSC.
TDM’s management is confident in the company’s ongoing rights issue, in which they issue 10 million shares for existing shareholders at VND30,000/share. The proceeds are mainly for M&A transactions. We currently have an OUTPERFORM rating for TDM with a target price of VND44,600/share.
TDM’s Q4 & 2023 results
VND bn | Q4 2023 | YoY | 2023 | YoY | % of Vietcap’s 2023F |
Water sales volume (million cbm) | 19.1 | 2.4% | 68.4 | -1.4% | 98.6% |
Revenue | 192 | 52.4% | 533 | 11.2% | 109.7% |
COGS | -122 | 108.3% | -292 | 26.9% | 114.3% |
Depreciation expenses | -39 | 7.5% | -149 | 2.5% | 95.0% |
Gross profit | 70 | 3.9% | 241 | -3.3% | 104.6% |
SG&A expenses | -4 | 76.4% | -14 | 38.5% | 99.0% |
Operating profit | 66 | 1.2% | 227 | -5.1% | 105.0% |
Financial income | 8 | -63.1% | 124 | 415.7% | 108.1% |
Financial expenses | -26 | 157.4% | -48 | 48.8% | 174.4% |
Interest expenses | -5 | -12.0% | -20 | -7.8% | 101.1% |
Net other income/loss | 0 | N.M. | 0 | -82.1% | N.M. |
Profit before tax | 48 | -37.8% | 302 | 30.8% | 99.8% |
Income tax expenses | -4 | 50.6% | -19 | 77.2% | 98.5% |
NPAT-MI | 43 | -41.2% | 283 | 28.6% | 99.9% |
NPAT from water generation | 43 | -16.3% | 171 | -22.5% | 99.9% |
Source: TDM, Vietcap
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