We attended BWE’s AGM on March 26 in which management provided more explanation regarding water tariff request process which is expected to be completed late 2025. Overall, we see a slight downside risk to our earnings forecast, pending a fuller review due to weaker-than-expected 2M result. We currently have an OUTPERFORM rating for BWE with the target price of VND52,600/share.

* BWE has set its 2025 guidance with some revision, targeting a sales volume of 220 million cbm (+10% YoY, similar to previous guidance provided in the Analyst Meeting (AM) on February 10. However, total revenue (including internal revenue) of VND4.8tn, revised down by 8.5% from the previous guidance. In addition, consolidated NPAT is projected to reach at least VND640 billion (flat YoY), which is revised down by 6% from the previous guidance. This NPAT guidance represents 80% of our current forecast, as it includes provision for potential forex losses. In addition, BWE released 2M result in which we estimate 2M 2025 consolidated NPAT at VND110bn (-5% YoY; 14% of our full-year forecast). Historically, BWE surpassed its guidance by 15% over the past seven years on average. 

* 2025 Dividend guidance slightly lower than our forecast. BWE proposed to pay VND1,300/share cash dividend for 2024, in line with forecast. BWE proposed 2025 dividend guidance with DPS of VND1,200-1,300/share vs our forecast of VND1,400/share. 

* Decreasing exposure to VND depreciation, expected to finish in Q1. At the end of 2024, BWE has USD113mn USD-denominated debt. BWE has successfully secured USD80mn in debt through a Cross-Currency Swap (CCS) contract, locking in a fixed interest rate in VND at 7% average for the remaining tenor. The impact is expected to be reflected in its Q1 2025 financial statements.

* Tan Hiep Water dividend guidance is higher than our forecast at DPS of VND7,000/share vs our forecast of VND5,000/share. BWE shared Tan Hiep water revenue and NPAT arrived at VND460bn and VND210bn in 2024.

* New growth driver with Nha Bich project in Binh Phuoc, BWE expects to get investment license in this year. BWE is studying Nha Bich Water Supply Project in Binh Phuoc province, which aims to deliver a capacity of 180,000 m³/day. The project is currently awaiting approval from the Binh Phuoc Provincial People’s Committee. In parallel, BWE is in the process of acquiring a 4.4-hectare land plot in Tan Thanh Ward, Dong Xoai City, to serve as the site for the new water treatment plant. BCM (leading industrial park developer in Vietnam) is optimistic about expanding its IP landbank in Binh Phuoc province which provide huge opportunity for BWE’s water business. 

* Long Thanh Highway water project is progressing: According to BWE, Dong Nai land master plan has been basically in line with the project. BWE expects secure the license in upcoming bidding procedures. 

* Aggressive capex continues, mainly at subsidiaries and associates’ level, broadly in line with forecast: In 2024, BWE spent VND642bn capex, mainly on waste segment. We forecast total capex for 2025 to reach VND1.2tn, driven primarily by the Nhi Thanh Water Plant’s Phase 3 and the new waste treatment capacity.  Specifically, 1) The Nhi Thanh Water Plant’s Phase 3, which will double Biwase Long An’s capacity is set for online in Q3 2025, in line with forecast as they finish 50% of the progress. 2) Furthermore, BWE plans to continue expanding its Waste-to-Energy plant, increasing capacity by an additional 12MW to 17MW after receiving investment license; 3) Chon Thanh Water Plant (Phase 3), which is in the final stages of completion will add 30,000 m³/day to double Biwase Binh Phuoc capacity. 

* Regarding capex of associates: 1) The Sai Gon – Can Tho JSC (47% stake) will double capacity to 50,000 cbm/day by Q2 2025. 2) Gia Tan Water JSC (32%-stake) is set to increase capacity by 60,000 cbm/day to 100,000 cbm/day. 3) Biwase Quang Binh (42%-stake) is set to double capacity to 30,000 cbm/day.

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