- 2024-10-31T00:00:00
- Company Research
REE released its Q3 2024 results with revenue of VND2.0tn (USD81mn, +3% YoY) and reported NPAT-MI of VND480bn (USD19.2mn, +7% YoY). The YoY uptick in revenue was driven by 13% YoY growth from the power segment (mainly from hydropower), which outweighed lower revenue from the M&E segment. Additionally, favorable hydrological situations, as well as high mobilization from hydropower in Q3, overshadowed lower earnings from the office leasing segment.
For 9M 2024, REE’s revenue declined slightly to VND6.0tn (USD242mn, -7% YoY) and reported NPAT-MI fell more significantly to VND1.3tn (USD53mn, -22% YoY), completing 69%/65% of our respective full-year forecasts. We attribute the YoY contracted earnings to weaker YoY revenue and earnings from the power segment (mainly due to hydropower with significant low mobilization and unfavorable weather conditions in H1).
We see downside risks to our 2024F NPAT-MI forecast, mainly due to the slower-than-expected earnings recognition from the real estate segment, pending a fuller review. Additionally, capex and new project developments are broadly in line with our expectation.
We currently have a MARKET PERFORM rating for REE with a target price of VND68,100/share.
The power segment’s 9M revenue was VND2,942bn (USD118mn, -17% YoY) and reported NPAT-MI was VND602bn (VND24.1mn, -35% YoY), fulfilling 75%/66% of our respective full-year forecasts. These results are broadly in line with our projections as stronger-than-expected hydropower earnings potentially offset slightly lower-than-expected profit from the wind segment and the lower-than-expected dividend received from PPC, and its lower stake (reduced by 2.8% to 20.7% by end-Q3).
Office leasing and real estate NPAT-MI complete 68%/8% of our respective full-year forecasts. We see downside risks from the slower-than-expected earnings recognition from sales of the Light Square project in Bo Xuyen (Thai Binh Province) with respective 9M revenue and NPAT of VND80bn and VND17bn, completing 13%/8% of our respective full-year forecasts.
The M&E segment recorded 9M NPAT-MI of VND72bn (USD2.9mn, +7% YoY), completing 51% of our 2024F full-year forecast, slightly trailing our expectation due to ~VND59bn of provision expenses booked for accounts receivable in Q2.
The water segment’s 9M revenue and NPAT-MI respectively declined by 25%/25% YoY, mainly driven by higher depreciation from Song Da Water volume expansion phase 2 and weak performance from its subsidiary, TK Plus JSC. 9M sales volume ticked up 2% YoY while earnings are in line with our forecast (completing 71% of our 2024F projection).
Figure 1: REE’s 9M 2024 results
VND bn | Q3 2023 | Q3 2024 | YoY | 9M 2023 | 9M 2024 | YoY | % of our 2024F |
Net Revenue | 1,962 | 2,029 | 3% | 6,505 | 6,048 | -7% | 69% |
M&E | 767 | 705 | -8% | 2,081 | 2,186 | 5% | 73% |
Office leasing & real estate | 267 | 282 | 6% | 801 | 876 | 9% | 50% |
Power | 895 | 1,008 | 13% | 3,564 | 2,942 | -17% | 75% |
Water | 32 | 33 | 5% | 59 | 44 | -25% | 66% |
Others | 0 | 34 | N.M. | 0 | 0 | N.M. | N.M. |
Reported NPAT-MI | 450 | 480 | 7% | 1,684 | 1,315 | -22% | 65% |
M&E | 41 | 38 | -7% | 67 | 72 | 7% | 51% |
Office leasing & real estate | 143 | 109 | -24% | 421 | 396 | -6% | 51% |
Power | 195 | 258 | 32% | 931 | 602 | -35% | 66% |
Water | 77 | 71 | -8% | 262 | 197 | -25% | 71% |
Others | -6 | 4 | N.M. | 2 | 48 | 1879% | N.M. |
Source: REE, Vietcap
Figure 2: REE’s 9M 2024 power revenue and NPAT-MI
VND bn | 9M 2023 | 9M 2024 | YoY | % of Vietcap's 2024F |
Revenue | 3,654 | 2,942 | -19% | 75% |
Hydropower | 2,311 | 1,626 | -30% | 79% |
Wind power | 588 | 573 | -3% | 65% |
Solar power | 198 | 209 | 6% | 71% |
Retail electricity* | 467 | 534 | 14% | 79% |
NPAT-MI | 931 | 602 | -35% | 66% |
Hydropower | 731 | 392 | -46% | 87% |
Wind power | 121 | 156 | 29% | 60% |
Solar power | 38 | 58 | 53% | 77% |
Retail electricity | 18 | 21 | 17% | 123% |
Thermal power | 52 | 34 | -35% | 21% |
Holdco power financial expenses* | -29 | -59 | 103% | 128% |
Source: REE, Vietcap (* Revenue and NPAT-MI from the Tra Vinh Electric Development JSC – UPCoM: DTV)
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