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Initiation GEG – BUY
07/07/2023 - 4:31:52 CHGia Lai Electricity JSC (HOSE: GEG)
GEG is the enterprise that operate purely in the field of electricity generation from renewable energy (RE) sources, and has been officially listed on the Ho Chi Minh Stock Exchange (HOSE) since Sep, 2019. By 2022, GEG had contributed 1,055 mil kWh to the national grid system, thanks to the diversified type of RE and geographical locations including 12 minor hydropower plants (under 30 MW), 5 solar farms, 3 wind power facilities, and a rooftop solar system in multiple provinces. In addition, GEG has number of alternative RE projects are gradually being implemented. With the attractive outlook of RE in the long-term, we issue a BUY recommendation for GEG at a target price of 21,594 dong per share, representing to 33.7% of expected total return.
Complying with the objectives outlined in National Power Plan VIII (PP8), which was officially authorized by the Prime Minister in mid-May 2023 for the 2021 – 2030 period, which stipulated that the electricity industry must advance one-step ahead in order to pave the way for sustainable economy development, energy demand and national energy security. Furthermore, in accordance with commitments made at COP 26 & 27, the Government has set the target of seek and utilizing greener and friendlier environmental energy, with less carbon emission that contributes to global warming and the greenhouse effect. Consequently, the Government is going to prioritize RE development and infrastructure improvement in tandem with RE, especially wind power including offshore and onshore.
Thanks to PP8’s emphasis on RE development would be substantially beneficial to GEG. Furthermore, GEG is progressively implementing additional RE projects as a catalyst for earning growth, along with numerous preferential funds from major international financial institutions such as Asian Development Bank (ADB, and the World Bank (WB) to accelerate the RE transition in Vietnam.
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