NT2 – Turn negative
- In 2024, gas-fired power is predicted to account for a smaller share of total power output. According to Plan 4A, the Ministry of Industry and Trade's strategy for 2024, coal power is expected to be used at a reasonably high rate. This estimate is backed by the steady stabilization of coal prices during a period when no new major power plants have been constructed. In contrast, the percentage of gas power is expected to fall by 12% compared to the actual power generation capacity mobilized in 2023, owing to a drop in the supply of gas for electricity production.
- 2024 is expected to be a challenging year for NT2. Based on the 2024 electricity market operation plan, we project that NT2's total power production in 2024 will be 2.3 bn kWh, a 22% decrease YoY. Assuming contracted electricity output (Qc) of 2.0 bn kWh (below the multi-year average) and an average gas price of 9.1 USD/mm BTU (an increase of 0.9% YoY), we expect NT2 to report net revenue of VND 5,047 bn (USD 206 mn) (+20% YoY) and a net loss of VND 87 bn (USD 4 mn).
- We are downgrading our recommendation for NT2 from NEUTRAL to REDUCE. By combining two valuation methods, the Dividend Discount Model (DDM) and the Discounted Cash Flow (DCF) analysis (equally weighted at 50/50), we have revised our target price for NT2 to VND 22,100 per share, down from VND 23,900 per share, following a reassessment of its business performance outlook for the 2024-2028 period.
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