We attended BWE’s analyst meeting on February 10. Overall, we see downside risk to our 2025 earnings forecast due to a potential six month delay in the water tariff hike, pending a fuller review. In contrast to TDM, which guides for 2025 volume growth of 4% YoY, BWE set volume growth of 10%. Additionally, management is confident that the new 43%-stake Tan Hiep Water associates will pay cash dividends of VND7,000 per share (8-9% yield).

• BWE’s management sets its 2025 guidance with sales volume of 220 million cubic meters in 2025 (+10% YoY), revenue (including internal revenue) of VND5.2tn, and consolidated NPAT of at least VND680bn (+6% YoY). This NPAT guidance is equivalent to 65% of our current NPAT forecast as it partly include provisions for forex losses.
• BWE’s management expects  the residential waste tariff to be approved in Q2 2025, followed by the approval of the water tariff hike in H2 2025. They stated that legal issues are holding up the water tariff hike, but it would be passed in H2 2025.
• Potential decreasing exposure to USD appreciation: At the end of 2024, BWE had USD113mn of USD-denominated debt. BWE has successfully secured USD40mn in debt through a Cross-Currency Swap (CCS) contract, locking in a fixed interest rate in VND at 7% for the remaining tenor. Looking ahead, BWE plans to secure an additional USD40mn in 2025, further strengthening its financial position.
• BWE’s management expressed strong optimism about the acquisition of a 43% stake in Tan Hiep Water (THW) and potential cash dividends of VND7,000/share. Although BWE will not hold a majority stake above 50%, it will remain the largest shareholder and retain the Chairman position, ensuring significant influence over THW’s operations. THW’s capacity expansion potential is a key highlight, as it sources raw water from the Saigon River, which offers comparable water quality to Dau Tieng Lake at a more favorable input price. Additionally, the abundant water supply from the Saigon River provides a solid foundation for scaling up capacity. While concerns about salinity intrusion during the dry season exist, the Chairman is confident in addressing this challenge effectively. Furthermore, THW’s strategic location positions it well for expansion toward key areas such as the 22nd National Road, An Suong Road, and Tan Son Nhat International Airport, creating significant opportunities for enhancing output capacity and market reach.
• 94%-stake subsidiary Biwase Long An is expanding capacity aggressively, broadly in line with our expectation. The Nhi Thanh Water Plant’s Phase 2 is set to come online in H2 2025, adding 60,000 cbm/day to its capacity, which will bring the total capacity to 120,000 cbm/day. BWE plans to further enhance the plant’s capacity to 200,000 cbm/day in the future. The total capex for the Nhi Thanh project is estimated at VND2tn, with VND1tn allocated specifically for the water plant. The remaining capex will cover the construction of a 22km-long pipeline, necessitated by the region’s unique geographical features. BWE’s management has highlighted the ongoing challenges in Long An Province, primarily due to salinity intrusion and the insufficient quality of groundwater from drilled wells. The recent water tariff hike of 10% in some water distribution companies in Long An Province strengthens Biwase Long An’s outlook.

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