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PPC - Stability

​It is likely that Northern provinces were not strongly affected by El Nino as Southern provinces during early months of 2016. Hence, PPC is not expected to benefit from unfavorable weather like thermal power plants in the South. As a result, estimated volume and average selling price would be slightly down from 2015’s result.

In 2015, PPC cautiously made provision on FX loss in associated company (Hai Phong thermal power plant) as well as the other long-term financial investment (QuangNinh thermal power plant). Therefore, JPYVND variation is considered as a key risk factor for PPC’s 2016 business result. Total estimated revenue shrinks 2.4% yoy to VND7,480 bn and equivalent PAT (included unrealized FX loss) is VND541 bn. 2016’s forecasted EPS consequently reach VND1,519, while excluded-FX-variation-EPS is VND3,028.

PPC’s 2016 Qc is significant cut from that of 2016, and expected to offset all added benefit from PL2 (the line was fully depreciated). Hence, we decrease PPC’s target price to VND19,100 per share from VND21,600 per share and recommend NEUTRAL for LONGTERM investment. We would like to note that PPC often pays high cash dividend. Cash dividend is approved at 25% for 2015 and 17% for 2016.”