REE – Stable growth and attractive valuation
- For 2024, we expect REE's profits to grow owing to (1) The hydropower group's business results are expected to be positive, with output recovering when La Nina is likely to return from mid-2024; (2) Etown 6 will come into operation from Q2/2024, contributing an additional 26% to the existing leasing floor area; (3) The real estate segment will record additional contributions from The Light Square residential real estate project phase 1 (opening for sale in Q1 and expected handover in Q2); (4) The M&E segment in 2023 was a low base when REE has made a provision for bad debts (VND 200 bn) in Q4/2023. Accordingly, we forecast that REE's net revenue and NPAT-MI will reach VND 9,478 bn/USD 386 mn (+11% YoY) and VND 2,519 bn/USD 103 mn (+15% YoY), respectively.
- We maintain a BUY recommendation with a target price of VND 74,200/share based on the Sum of the Parts (SoTP) valuation method, equivalent to an expected return of 26% based on the closing price on Feb 16th, 2024.
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