- 2024-10-18T00:00:00
- Company Research
- PPC released its Q3 2024 revenue result of VND1.5tn (+10% YoY) but reported a net loss of VND5bn (vs reported NPAT-MI of VND84bn Q3 2023). The decline in the bottom line was primarily driven by losses from power generation, as (1) average materials costs increased by 11% YoY due to higher mixed coal prices, and (2) unfavorable CGM prices along with a reduction in Pha Lai 1's fixed component in its PPA contract. Additionally, dividend income was 74% lower YoY, further affecting NPAT-MI.
- For 9M 2024, revenue was VND5.9tn (+47% YoY) and reported NPAT-MI was VND246bn (-14% YoY). We estimate NPAT from power generation at VND88bn, a recovery compared to a VND27bn loss in 9M 2023, mainly due to (1) a 47% YoY increase in sales volume, supported by the re-operation of the S6 generator, which outweighs (2) a 2% YoY rise in average material costs and (3) the lower Pha Lai 1 fixed component. However, the 49% YoY drop in dividend income dragged down reported NPAT-MI.
- The 9M 2024 results achieved 82% of our full-year revenue forecast but only 36% of our NPAT-MI forecast, suggesting downside risks to our earnings outlook. This is due to (1) lower-than-expected fixed components from Pha Lai 1, (2) higher-than-expected material costs driven by rising coal prices, and (3) higher-than-expected production volume from Pha Lai 1, which implies higher losses due to its higher heat rate, requiring more coal to generate the same amount of electricity and which increases the average material cost. In 9M 2024, Pha Lai 1’s sales volume of 633 million kWh (130% of our full-year forecast, above our expectation) and Pha Lai 2’s production volume of 2,550 million kWh (70% of our full-year forecast, below our expectation).
HND’s (PPC’s 27%-stake associate company) 9M 2024 NPAT-MI completes 47% of our full-year forecast, falling below our expectation. In Q3 2024, HND's revenue was VND2.4tn (-18% YoY) with a net loss of VND9bn (vs reported NPAT-MI of VND192bn in Q3 2023). This weak performance was driven by (1) lower sales volume YoY, (2) higher average materials costs, and (3) unfavorable CGM prices. Q3 sales volume reached 1.3 million kWh (-26% YoY) with a Qc ratio of only 40%. We estimate an average materials cost of VND1,674/kWh (+21% YoY) due to higher mixed coal prices in Vietnam, while the average CGM price was VND1,207/kWh (+12% YoY), insufficient to generate profit. For 9M 2024, revenue was VND8.6tn (-2% YoY) and NPAT-MI was VND422bn (-21% YoY), completing 80% and 47% of our full-year forecasts, respectively. We see downside risk to our HND’s earnings forecast, pending further review.
PPC’s 9M 2024 results
VND bn | Q3 | Q3 2024 | YoY | 9M | 9M 2024 | YoY | % of Vietcap’s 2024F |
Sales volume (million kWh) | 763 | 779 | 2% | 2,174 | 3,190 | 47% | 77% |
Price spread (VND/kWh) | 188 | 141 | -25% | 249 | 215 | -14% | 59% |
ASP (VND/kWh) | 1,752 | 1,882 | 7% | 1,860 | 1,859 | 0% | 107% |
Average material cost (VND/kWh) | 1,564 | 1,741 | 11% | 1,611 | 1,644 | 2% | 119% |
Revenue | 1,337 | 1,466 | 10% | 4,044 | 5,931 | 47% | 82% |
COGS | -1,421 | -1,523 | 7% | -4,009 | -5,765 | 44% | 88% |
- In which, maintenance & other expenses | -167 | -91 | -46% | -319 | -302 | -5% | 75% |
Gross Profit | -84 | -57 | N.M. | 35 | 166 | 369% | 25% |
G&A | -29 | -33 | 15% | -75 | -97 | 29% | 75% |
Operating profit (EBIT) | -113 | -90 | N.M. | -40 | 69 | N.M. | N.M. |
Net interest income | 7 | 0 | -100% | 16 | -1 | -105% | -18% |
Dividend income | 176 | 45 | -74% | 313 | 158 | -49% | 59% |
Others | -3 | 27 | N.M. | -3 | 27 | N.M. | N.M. |
PBT | 67 | -18 | -126% | 286 | 254 | -11% | 32% |
Income tax exp | 18 | 13 | -28% | 0 | -8 | N.M. | 7% |
Reported NPAT | 84 | -5 | -106% | 286 | 246 | -14% | 36% |
NPAT from power generation * | -92 | -50 | N.M. | -27 | 88 | N.M. | 21% |
Source: PPC, Vietcap (*Vietcap estimate for NPAT from power generation = Reported NPAT - Dividend income)
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