HDG – Business outlook to recover in 2024
- In 3Q23, as the El Nino has negatively affected the hydrological condition and the output of hydropower plants (the 3Q output of hydropower plants reached 288mn Kwh, -29%YoY), the revenue from the power segment has decreased by 30%YoY. The company has not recorded any revenue from residential real estate, because the Charm Villas project has handed over all units of the previous phase, while the third phase has not yet been launched for sale. For the first 09 months of 2023, NPAT-MI was VND 423bn (or USD 17.4mn, -52%YoY), which met ~48% of company’s business plan.
- In the 4Q2023, we expect the 4Q electricity output to reach 413mn kWh (+16%QoQ, with hydropower output may increase by 20%QoQ, because the fourth quarter is usually the peak mobilization period for hydropower plants in the Central region). HDG's revenue can reach VND 667bn (USD 27.4mn, -42%YoY, +45%QoQ), and the NPAT-MI reach VND 217 bn (-13%YoY, +157%QoQ). For the whole year 2023, the parent company's PAT will reach VND 639 bn (-42%YoY, reaching 66% of the company's business plan). The corresponding EPS in 2023 will be VND 2,091.
- For 2024, we expect that the output of hydropower plants will improve from the 2H 2024 (the peak period of HDG's hydropower plants, also the probability of El Nino will decrease and be replaced by the Neutral/La Nina phase). For the real estate segment, with the expectation that the market can recover in 2024, the company has started to implement key projects, including: 1/~110 low-rise units of phase 03 - Charm Villas project, 2/ Green Lane, an apartment project in District 8, HCMC. We estimate 2024 NPAT-MI of VND 765bn (+20%YoY, USD 31.5mn). The 2024 equivalent EPS is VND 2,500.
- Using the SoTP (Sum-of-the-parts) method, we maintain the target price of VND30,900/share (Upside +11.2%), equivalent to an ACCUMULATE recommendation for Hado Group Jsc. We like the company’s asset with power plants and high-potential residential land bank, and with the 2024 business results could be improved, we recommend investors can accumulate the stock for long-term investment.
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