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NT2 - Recovery in dispatch rate leads business growth

Q1/2025: Dispatch rate and electricity selling price exceeded expectations
• NT2 recorded revenue of VND 1,427 billion (+445% YoY) and net profit after minority interest (NPAT-MI) reached VND 37 billion, recovering from a loss of VND 158 billion in the same period.
• Output reached 596 million kWh (+293% YoY). This growth rate comes from the decrease in output of Phu My 1 plant due to plant maintenance activities and NT2 being mobilized to compensate to ensure load demand.
• Gas prices only increased slightly by 3% YoY, due to the impact of MFO prices. However, due to the additional use of oil fuel, NT2's gross margin decreased by 1.8 pps QoQ, but still improved compared to the gross loss in Q1/2024. The company also exceeded the planned NPAT-MI in the quarter, at VND 37 billion compared to the loss plan of VND 121 billion.
Q2/2025 outlook: Gross profit margin soars thanks to high Qc output
As of 5M2025, the systerm-wide electricity volume rose by 3.6% YoY, but the output of gas-fired group fell by 22% YoY due to the increase in the supply of hydropower and renewable energy. Accordingly, we estimate that NT2's Q2/2025 dispatched volume will decrease by 22% YoY to 875 million kWh (+47% QoQ) and be lower than the contracted vollume (Qc) allocated in the quarter.
Revenue in Q2/2025 is estimated at VND 2,124 billion (-3% YoY). Due to the expected actual output being lower than Qc, revenue in Q2 will come not only from power generation activities, but also from contracts for difference (CfD). Gross profit margin is expected to expand by 4.1 pps over the same period. NPAT-MI is estimated to increase by 39% YoY to VND 170 billion.
For the whole year of 2025, total electricity generation is calculated to reach 3,031 million kWh, up 11% YoY. Gross profit margin is estimated to increase by 4.7 pps YoY due to (1) increased allocation of Qc compared to 2024 levels, (2) plant depreciation expenses starting to decrease from Q4/2025, and (3) retroactive revenue from exchange rate differentials and environmental charges. Accordingly, revenue and profit after profit are estimated at VND 7,353 billion (23% YoY) and VND 329 billion (297% YoY), respectively. EPS in 2025 will reach VND 1,143.
Outlook and recommendation
After a challenging 2024, we expect 2025 to be the year of recovery for NT2 thanks to (1) mobilized output increased by 11% YoY, mainly contributed from the recovery of 1Q/2025; (2) Profit margin expands when (a) the ratio of Qc to total power generation of gas-fired power plants improves from the low level of 2024 and (b) plant depreciation costs begin to decrease from Q4/2025; and, (3 NPAT-MI see significant contribution from retroactive electricity sales revenue due to exchange rate differences in the 2019-2021 period and income from forest environmental services in the 2019-2024 period.
In the long term, we believe that gas-fired plants using domestic gas sources are unlikely to be dispatched at a high level due to the ongoing decrease in fuel supply. NT2 can solve the difficulty of fuel supply shortage by switching to using imported LNG fuel. However, the Company's Board of Directors has not yet made a plan to convert fuel sources due to the lack of a specific framework for gas purchase prices and regasification and warehousing costs. Therefore, this is still an issue that needs to be monitored by investors.
Using a combination of FCFF and EV/EBITDA methods with a ratio of 60:40, the fair value of NT2 in the next 12 months is determined to be 20,900 VND/share. Combined with the expected 12-month cash dividend of 1,000 VND/share, the total expected return of the stock is 6% compared to the closing price on July 8, 2025.