We increase our volume growth forecasts for BWE to 7%/11% in 2024/2025F, respectively and maintain our volume forecasts for TDM. For the first five months of 2024, BWE’s volume grew 9.6% YoY, while TDM’s volume grew 4.4% YoY. BWE’s 5M volume growth was driven primarily by industrial growth of ~10% YoY while residential growth was almost flat YoY. BWE’s higher-than-expected sales volume indicates robust recovery in major cities in Binh Duong province. We increase our 2024F full-year volume growth forecast from 5% to 7% and our 2025F forecast from 10% to 11%, boosting the 2023-2028F CAGR to 10.2% from 9.6%. Meanwhile, we maintain our volume growth assumptions for TDM at 5%/10% for 2024/2025F, respectively.

We raise our water tariff increase assumptions from 3% to 5% p.a. but maintain the effective date of July 1, 2025. According to Mr. Thien, Chairman of BWE, the company’s water tariff hike proposal of 5% p.a. is expected to be approved at the end of this year, which is six months sooner than our forecast. In the recent analyst meeting, BWE’s management reiterated its confidence that this proposal will be approved. Although we raise our assumption for BWE’s water tariff increase in this update report, we maintain a more conservative assumption for the effective date of mid-2025, pending further developments.

We assume a higher increase in residential waste tariffs, starting in Q4 2024, from 10% to 20%, following recent progress with the request and management’s strong confidence. From our discussion with management, we understand that their request has been approved by the MoIT, allowing them to proactively set prices based on their actual costs. They now need to get approval from the provincial authorities to get the new price agreed upon before officially being able to raise prices. BWE’s management expects residential waste tariffs, which have been unchanged for the past 10 years, to increase ~ 20%.

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