NT2 Update – UNDERPERFORM

Nhon Trach 2 Thermal Power JSC (HOSE: NT2)

Following the disappointed results in 2023 (Revenue: -27.3% YoY, NPAT: -46.4% YoY), we project NT2 will continue to experience a decline in revenue and NPAT in 2024 (Revenue: -43.4% YoY, NPAT: -61.2% YoY). The underlying reason is that the contract output Qc in 2024 continues to decrease (2024: 1.8 bn kWh compared to 3.5 bn kWh in 2023).  The valuation for NT2 for the next 12 month is equivalent to VND 17,900 per share, rating UNDERPERFORM.

At the end of Q1/2024, NT2 reported results with revenue of VND 262 bn, -88.0% YoY, completing 4.1% of the 2024 plan; and NPAT was VND -159 bn.

For the period of 2024F-2026F, we expect NT2’s business situation to no longer be as good as in previous periods due to the following factors:

(1) The end of the El Nino cycle: Increased precipitation is expected, leading to hydropower plants would post positive production results again and scale down the production volume of thermal power plants.

(2) The situation of local power outage in the South is not as serious as in the North.

(3) The thermal power plants NT3 & NT4, with mordern technology, lower CO2 emissions, and better efficiency, will be put into operation in late 2024, mid-2025, and will compete directly with NT2 in the Nhon Trach Industrial Zone (IZ) – Dong Nai in particular and the South in general.

(4) Full-cost electricity prices and retail electricity prices are still not attractive enough for EVN to prioritize mobilizing electricity, despite the advantages of stability and environmental friendliness over coal-fired electricity.