GEG Flash News – NEUTRAL

Gia Lai Electricity JSC (HoSE: GEG)

GEG announced Q2/2024 results with revenue increasing slightly by 1.9% YoY to VND488 bn, but gross profit and NPAT plummeted by 18.8% YoY and 83.8% YoYto VND212 bn and VND 1 bn, respectively.  Acumulated 6M2024, NPAT was VND127 bn, +15,6% YoY, completing 47% of GEG’s 2024 plan and 48.3% of ACBS forecast. 

Q2/2024 revenue increased by 1.9% YoY, but decreased by 34.0% QoQ, reaching VND488 bn.  Gross profit reached VND 212 bn, -18.8% YoY due to several factors including (1) the El Nino cycle causing a decrease of 38.6% YoY in hydropower output, (2) the second quarter is typically the weakest period for wind activity, resulting in a 60.1% decrease in wind power output compared to Q1/2024, and (3) the temporary selling price of the Tan Phu Dong 1 project is only 50% of the ceiling price under the wind generation framework (Decision No. 21/QD-BCT dated January 7, 2023).

Financial expenses decreased to VND169 bn in Q2/2024, -20.7% YoY, with interest expense decreasing to VND163 bn, -20.9% YoY.  Accumulated 6M2024, financial expenses was reported at VND415 bn, + 3.0% YoY, and interest expense was VND405 bn, +5.5% YoY.

Administrative expenses in Q2/2024 decreased to VND28 bn, -28.2% YoY.  Accumulated 6M2024, administrative expense remained unchanged YoY at VND72 bn.

Quick conclusion: Q2/2024 performance was not quite strong due to the typical seasonal factors in the second quarter: sunny season and less wind, which negatively impacted hydro and wind power generation, accounting for 48.8% of the company’s renewable energy mix. However, wind energy still recorded a positive growth of 27.9% YoY thanks to the operation of the Tan Phu Dong 1 project. We expect GEG to negotiate a higher selling price for wind power, exceeding the current 50% ceiling, and to recover the revenue from the time the project was officially put into operation.

View details in the attachment below.