Report
Viet Dragon Securities
Hoai Trinh

Analyst Pin-board: HND – 3Q22 tiny profit despite depreciation extension

  • HND reported its 3Q22 electricity sales volume to 1.57mn kWh (-3%QoQ, -8% YoY). Despite a slight decrease in electricity sales volume, the high contracted price (Pc) due to rising input material prices prevailed, resulting in net revenue of VND 3,070 bn/USD 126 mn (+40% YoY). Net income came at VND 41 bn/USD 1.7 mn (5.6 times higher YoY compared to a relatively low base in 3Q21).
  • The company is experiencing short-term hiccups as a result of (1) rising coal prices, (2) FX losses due to USD/VND appreciation, and (3) unfavorable weather conditions for thermal plants. However, HND maintains a competitive advantage by operating two power plants with stable capacity, which is expected to have a high mobilization rate when the El Nino phase comes next year.
  • We are maintaining our FY22 earnings forecast for sales of VND 10,946 bn/USD 450 mm (+21% YoY), and NPAT of VND 751bn/ USD 31 mn (+65% YoY). However, we lower our target price due to the future impact of rising input materials, coupled with La Nina which might persist longer than expected. Using 40%/30%/30% of FCFF, P/E and EV/EBITDA methodology, we arrive at a one-year target price of VND 20,500. With an expected cash dividend of VND 1000/share in the next 12 months, implying a total return of 42%, based on the closing price of Oct 19th, 2022. We have a BUY rating on HND
19/10/2022 6 EN
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Viet Dragon Securities
Viet Dragon Securities

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Hoai Trinh

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