Analyst Pinboard PPC – Turning a loss from profit in 3Q2022
- PPC’s 2Q 2022 performance is well aligned with our expectations emphasizing the company's predictability of weak results. PPC's sales volume in 2Q 2022 was 827 mn kWh (-11% YoY). Nevertheless, 2Q net revenue slightly increased 6% YoY to VND1290 bn thanks to higher CGM prices. NPAT slumped 38% YoY, to VND75bn, mainly due to a lack of financial income coming from cash dividends of QTP and HND.
- In 2022, we forecast that PPC will provide around 3.7 bn kWh of sales volume, with net revenue and NPAT of VND 5,640 bn (+45.8% YoY) and VND 407 bn (+88.0 % YoY), respectively. Dividend income from associate companies HND (VND 800/share) and QTP (VND 800/share) paid in Q3 2022 will save PPC’s 2H2022 bottom line.
- We expect PPC’s earnings to rebound from 2023. Solid dividend income from associate companies, coupled with Pha Lai 2’s S6 generator resuming operation as the main pillars to spur a 2023 recovery. In addition, PPC’s attractive prospective dividend yield of 11% for FY23F offers some share price support. Hence, we upgrade our rating for PPC from NEUTRAL to BUY whilst also revising our target price to VND 22,500, indicating an upside of 26% from the closing price as of Aug 11th, 2022.
Pha Lai Thermal Power Joint Stock Company is a Vietnam-based electricity company. It is engaged in the operation, maintenance and management of the thermal power plant in Hai Duong Province for electricity generation and distribution. The Company also constructs power plants and transmission lines. In addition, it is involved in the trading of equipment and machinery used in the electricity sector, as well as the provision of repair and maintenance services. Other activities include the manufacture and trading of gypsum, clinker and concrete additives. The Company announces that Vietnam Electricity Group (EVN) has completed its divestment of 51% stake in the Company to Power Generation Corporation 2 (EVNGenco2) on November 7, 2013.
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