VSH - Optimistic Long-Term Prospects
​Vinh Son–Song Hinh Hydropower JSC (HSX:VSH) is a big player among the listed hydropower companies with potential for large expansion capacity in the next three years. In the short term, we highly appreciate VSH for the high operating efficiency of its two current plants, resulting to high competitiveness in the Competitive Generation Market (CGM). In the long term, the contribution from Thuong Kon Tum hydropower plant with increasing profit would drive the growth story of the company and become the main reason for its stock price to reach new heights.
Moreover, a stronger voice and support from REE, a large shareholder, is expected to enhance VSH’s management capacity and help the company better deal with its current fundamental problems in project management and ensure the implementation progress of TKT project. We also believe that any positive developments in TKT project will translate quickly into catalysts for the upward movement of VSH’s stock price.
Using a combination of P/B and DCF valuation methods, we came up with the target price for VSH stock at VND22,100/share. This target price, coupled with a VND1,000 cash dividend, yields a total return of 29% (calculated based on the closing price on 31 August 2017). Therefore, we rate BUY on VSH stock.Vinh Son - Song Hinh Hydropower Joint Stock Company is a Vietnam-based company engaged in the electricity industry. The Company is engaged in the operations and management of hydroelectricity plants, as well as the generation and trading of electricity. It offers design, project management and execution supervisory services for hydroelectricity, irrigation and road and bridge projects. In addition, it trades materials and equipment for the hydroelectricity industry, and is involved in real estate operations.
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