POW Flash News – OUTPERFORM

PetroVietnam Power Corporation (HoSE: POW)

POW reported a +6.7% YoY in revenue to VND6,061 bn in Q3/2024, accompanied by a +764.8% YoY in NPAT to VND453 bn. For 9M2024, the company achieved VND1,111 bn in NPAT, +27.7% YoY primarily attributed to foreign exchange gains. These results surpassed the company’s target by 20% and ACBS’s forecast by 15%, prompting OUTPERFORM recommendation.

Q3/2024 revenue increased by 6.7% YoY, primarily driven by +8.7% YoY in output, reaching 3.0 bn kWh. Conversely, the average selling price declined by 5.6% YoY to VND1,908/kWh.

NPAT soared by 764.8% YoY to VND453 bn, primarily attributable to robust financial revenue despite a decline in gross profit margin. Gross profit was VND 296 bn, -3.6% YoY, hence gross profit margin contracted to 4.9% from 5.4% in the same period due to increased input costs from the gas turbines output growth. Specifically, CM1&2: 1.2 bn kWh, +17.1% YoY, NT1: 111.4 mil kWh, +51.2% YoY, and NT2: 743 mil kWh, +103.3% YoY.

Financial revenue was bolstered by a net foreign exchange gain of VND157 bn in Q3/2024, a significant reversal from the VND72 bn loss incurred in the corresponding period of 2023. Additionally, -28.1% YoY in interest expenses contributed to the NPAT growth as well.

For 9M2024, similar trends were observed. Generation output reached 11.4 bn kWh, +2.4% YoY, driving +0.7% YoY in revenue to VND21,533 bn. However, the average selling price declined by 3.5% YoY to VND 1,903/kWh, resulting in -3.2% YoY in gross profit to VND1,408 bn. Nevertheless, NPAT surged by 27.7% YoY to VND 1,111 bn, driven by a +59.9% YoY in financial income and -27% YoY in finance costs, amounting to VND616 bn and VND357 bn, respectively.

The disbursement progress of NT3&4 projects in Q3/2024 was hindered by adverse weather conditions, reaching VND17,516 bn by the end of the quarter.

Quick conclusion: Q3/2024 results enabled POW to surpass its 2024’s plan by 20% and exceed our forecast by 15%. However, we maintain our forecast and valuation for POW due to concerns regarding a less favorable outlook for Q4/2024. The resurgence of upward pressure on the exchange rate coupled with the onset of the La Niña phase of the ENSO cycle increases the likelihood of reduced POW’s gas power plants.

View details in the attachment below.