- 2021-07-27T00:00:00
- Company Research
- We cut our target price by 7% to VND23,000/share due to a downward revision in our earnings forecast for 2021-2022F and unchanged forecast for 2023-2025F. In addition, we maintain our BUY rating for NT2. We view NT2 as a good dividend play as we expect its DPS to rise from VND1,500 in 2021F to VND2,000 in 2022F and VND3,000 in 2023F. We expect weak earnings in Q3 2021, followed by a rebound in Q4. On June 18, NT2 signed an agreement with Vietnam Electricity Group (EVN) regarding its PPA review. The new PPA price was applied retrospectively from January 1, 2021; therefore, Q2 2021 NPAT was a multi-year low due to the retrospective profit adjustment of Q1. We expect NT2 will have weak earnings in Q3 — peak rainfall season — but they will improve from Q2 partly due to high-contracted volume in Q3 2021 (+25% YoY). We forecast profit to rebound in Q4 with estimated volume growth of 45% YoY. We forecast NPAT to bounce back in 2022. In 2021, NT2 will be impacted due to a 12% cut in contracted volume, nearly flat total sales volume, a 24% YoY increase in gas price and a downward revision in its fixed component PPA from VND497/kWh to VND460/kWh. In 2022, we expect NPAT to grow 67% to VND584bn (USD25mn), driven by a 16% YoY increase in sales volume (record high growth since NT2’s inception), 13% YoY growth in contracted volume and a limited YoY gas price increase. We expect NT2 to benefit from stronger electricity consumption in 2022F vs 2021F. NT2 is negotiating with EPTC regarding forex losses. NT2 expects to receive a VND400bn (USD17mn) payment from EVN Power Trading Company (EPTC) for the forex losses on its USD/EUR-denominated debt in 2016-2020 due to a difference between the signed and actual exchange rate. Higher gas price assumption. We raise our industry gas price assumption by ~3% for 2021-2022F following our upward revision to our Brent oil price forecast in our Energy Sector Update, dated July 27, 2021. See more on page 10. |