POW Update – OUTPERFORM

PetroVietnam Power Corporation (POW VN)

POW plans to generate  of 18.9 bn kWh, resulting in VND38,185 bn in revenue, +26.0% yoy, and VND439 bn in NPAT, -60.5% yoy in 2025. In Q1/2025, POW reported VND8,150 bn in revenue, +30.5% yoy, and VND 472 bn in NPAT, +118.5% yoy, completing 108% of the plan and 38% of ACBS forecast. We give a target price of VND15,200/share for POW, rating OUTPERFORM by the end of 2025, representing a total expected return of 16.5%.

Investment points:

1. The existing facilities, including Nhon Trach (NT) 1&2, are anticipated to resume stable operations, contributing to enhance 2025 financial results compared to 2024.

2. The La Niña cycle in 2025-2026 is projected to conclude swiftly, transitioning into a Neutral phase. Consequently, the average annual precipitation in 2025–2026 is not forecasted to significantly increase from 2024 levels, which has implications for hydropower generation.

3. NT 3&4, Vietnam’s first imported LNG gas-turbines power plants invested by POW, are scheduled for official operation in Q3/2025 and early 2026, respectively. While these projects may not contribute to profits in short term, they are poised to lay the groundwork for the future development of other gas-fired power projects and drive the company’s long-term growth trajectory. 

Risks: 

1. POW faces the challenge of optimizing electricity dispatch among its power plants located within the same region, such as NT 1, 2, 3, and 4, to maximize overall efficiency and profitability.

2. The average cost of input gas is projected to continue increasing due to the depletion of cheaper domestic gas sources and the high dependency of LNG prices on global oil market fluctuations. This could squeeze profit margins.

3. The average Full Market Price (FMP) in 2025 might be lower than in 2024. This is attributed to potentially reduced dispatch prices from hydropower as the El Niño cycle concludes, leading to more favorable conditions for hydro plants.