Initiation PC1 – BUY

PC1 is one of the few exceptional companies specializing in energy infrastructure construction, which was established in 1963, over 60 years ago with chief business in Lines and Substations installation. It has become a diversified company over a lengthy period of development, but its primary business remains in the construction of national electrical systems and generators. We issue a BUY recommendation on PC1 with a target price of 30,442VND, representing a 16.2% total expected return.

To pave the way for production and household activities, the electricity industry must advance at a rate that is both parallel to and slightly ahead of the economy. Infrastructures require attention and continuous reinvestment in tandem with the size of the economy, particularly the transmission and distribution system.  The national total installed capacity reached 79,651 MW (rank 1st in ASEAN), provided 286,4 bn kWh by the end of 2022, and the government’s analyst expected an average annual investment capital requirement of 290,000 bn VND for this sector. Thus, PC1 would be the primary beneficiary in the industry value chain thanks to its initial operations.

Furthermore, PC1 has also expanded its business to power plant construction, particularly solar and wind power in the context of Vietnam’s re-commitments at COP27 reducing carbon emissions to Net-Zero by 2050 and JETP’s grant of 15.5 bn USD to accelerate the energy transition.  According to the National Power Plan VIII (PP8) – draft 9th in Dec 2022, even though it has not yet been officially approved, many more renewable energy (RE) projects will be implemented, accompanies an advanced grid system to absorb its significant weakness: instability.  Therefore, PC1 will further gain from RE generators construction.

Moreover, the company also invested in other fields: 

a) RE portfolio: Seven (7) hydroelectricity plants – 169 MW and three (3) wind power generators – 144 MW and is progressing. 

b) Mining: Was scheduled to be ready for commercial production in Q3 2023.