- We increase our target price (TP) for REE by 6.2% and upgrade our rating from MARKET PERFORM to OUTPERFORM.

- Our higher target price is driven by 1) a 4% higher valuation for the hydropower segment following a 20% higher aggregate 2024-2028F NPAT-MI, 2) 30%/12% higher valuations from the M&E and water segments due to higher YoY NPAT-MI in 2025F vs 2024F (we used 2024F in our previous valuation), and 3) lower Holdco net debt of VND236bn vs VND861bn previously.

- These factors, combined with the positive impact of rolling our target price to end-2025, outweigh our 2.4% lower aggregate NPAT-MI for 2024-2028F (respective changes of -10%/0%/-4%/+1%/-2%). This lower aggregate earnings projection is driven by our lower earnings forecast for wind and office leasing, which outweighs our higher hydropower profit forecasts. 

- We forecast NPAT-MI to dip in 2024 and rise 37% YoY in 2025F, fueled by NPAT-MI growth across segments, including earnings from power (+32% YoY), 3x real estate, and 2.5x M&E.

- We forecast an 18% EPS CAGR for 2023-2026F, driven by 1) 16% growth in power capacity (162 MW of additional wind capacity) and rising hydropower earnings, 2) recovery in the M&E segment from 2023’s low base, and 3) the E-town 6 building starting operations in Q3 2024.

Powered by Froala Editor