NT2 Update – NEUTRAL

Nhon Trach 2 Thermal Power JSC (HoSE: NT2)

NT2 announced a more positive Q3/2024 result compared to the 1H2024 results. Revenue reached VND1,712 bn, +109.8% YoY, while NPAT reached VND44 bn. However, cumulative 9M2024, NPAT amounted to VND8 bn, -96.9% YoY, due to the loss of VND36 bn in 1H2024. This achievement completed 11.8% of the company’s 2024 target and 4.4% of ACBS’s forecast. A significant drop in power generation output (9M2024: 1,9 bn kWh, -22,6% YoY) and rising gas prices were the main reasons for the poor performance. 

The significant increase in Q3/2024 revenue of 109.8% YoY was primarily driven by a growth of 103.6% YoY in output, reaching 743 mil kWh. In contrast, during the same period last year, NT2 underwent a 100,000-hour overhaul, leading to a substantial decline in production. 

Despite a growth of 56.3% YoY in administrative expenses to VND25 bn, NPAT reached VND44 bn compared to a loss of VND124 bn in Q3/2023 due to improved gross profit. Gross profit improved from a loss of VND133 bn in Q3/2023 to VND60 bn in Q3/2024; however, the gross profit margin remained low at 3.5% due to a +3.6% YoY in the average input gas price to USD 9.59/MMBtu.

Cumulative 9M2024, revenue reached VND4,160 bn, -19.7% YoY, gross loss amounted to VND37 bn, compared to a gross profit of VND508 bn in 9M2023, while NPAT reached VND8 bn, -96.9% YoY. The net profit margin decreased to 0.2% from 4.9% in the same period last year.

Quick conclusion: NT2 achieved 11.8% of its 2024’s NPAT planned after Q3/2024 and 4.4% of our forecast. These results have not yet reflected the VND177 bn in exchange rate gains as previously announced at the general shareholders’ meeting. We expect NT2 will continue to post a positive result in Q4/2024, recognize VND177 bn from EVN to support for 2024’s profit; thus,  we remain our forecast and target price.