GEG – 2024 Earnings growth driven by wind power segment; lower interest expenses
• GEG posted Q3 2024 results as anticipated, with revenue reaching VND 1,770bn (+11% YoY; USD 70mn) but a net loss of VND 27bn (USD -1mn) due to a lower sales volume of wind farms. For 9M2024, GEG revenue of VND 1,770bn (+11% YoY; USD 70mn), while net profit reached VND 84bn (-3% YoY; USD 3mn).• We expect GEG's Q4 2024 earnings to improve, supported by reduced financial expenses from debt restructuring. Accordingly, we forecast 2024F revenue of VND 2,349bn (+9% YoY; USD 93mn) and NPAT-MI of VND 199bn (+45% YoY; USD 8mn), which are driven by a full-year contribution of the Tan Phu Dong 1 power project and lower interest expenses. 2024F EPS is estimated at VND 441.
• For 2025, we expect growth to resume in 2025 due to: (1) a recovery in hydropower sales volume compared to 2024, and (2) debt restructuring. Additionally, there is potential for an one-off profit once GEG finalizes electricity tariff negotiations for the Tan Phu Dong 1 project.
• GEG's shares are currently trading at VND 10,800 per share (P/B 0.7x), reflecting a high discount and the negative outlook of power sector in general. We recommend an "Accumulate" rating for GEG, with a target price of VND 12,200 per share (+14%), based on FCFF and P/E valuation methods.
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