Company Overview

The PetroVietnam Power Corporation (POW) was established in 2007, primarily operates in the fields of electricity production, transmission, and trading. POW was privatized in 2018 and was listed on UPCoM at the same time, followed by its listing on the Ho Chi Minh Stock Exchange (HoSE) in 2021.

Currently, POW manages and operates seven power plants with a total designed capacity of 4,205 megawatts, encompassing gas-fired, coal-fired, hydropower, and solar power plants. POW supplies approximately 21 billion kWh to the National Energy Grid annually, accounting for 5 - 10% of the country's commercial electricity output, ranking second after the Vietnam Electricity (EVN) Group. 

Financial Performance

POW financial performance experienced fluctuations over the past few years. POW’s electricity sales declined in 2020 and 2021 (-16.0% and - 17.4% respectively) due to natural gas shortages during Covid-19 but rebounded significantly from 2022. In 2023, POW's revenue reached VND28,329 billion, up 0.4% year-over-year (YoY), while net profit after tax (NPAT) fell sharply by 49.7% to VND1,283 billion due to (i) Vung Ang 1, Ca Mau 2, and Nhon Trach 2 underwent maintenance and overhauls; (ii) the El Niño phenomenon significantly reduced electricity output at hydropower plants Hua Na and Dakdrinh; (iii) rising fuel costs, particularly for natural gas, substantially increased the cost of goods sold. As of 9M/2024, POW recorded revenue of VND21,686 billion (+0.7% YoY).

Key Investment Rationales

We project POW to achieve strong earnings growth of 29.8% pa for period of 2025-2025 based on:

• Vung Ang 1 as a key growth driver for POW in 2025.
• Recognition of Extraordinary Compensation for Vung Ang 1.
• Ca Mau 1 & 2 are expected to achieve impressive dispatch capacity from 2025 onward.
• NT3 and NT4 start operating in 2025, with maximum output to reach 9 billion kWh.
• Nhon Trach 1 and Nhon Trach 2 are expected to perform better thanks to the added gas supply from new fields in the Southeast region in late 2025 and 2026.
  

Based on valuation using the DCF, P/B, and P/E methods, SBBS recommends a BUY for POW with a 12-month target price for POW at 16,747 VND/share, an 42.5% upside potential vs. last closing price of 11,750 VND/share as of January 17, 2025. Our 3-year price target is set at 28,261 VND/share, an expected upside potential of 140.5% reflecting its strong earnings growth potential.