NT2_BUY_TP 28,000 VND_Upside 7%_Positive Prospects Are Maintained_BSC Company Update

 Valuation

▪ BSC recommends BUY shares of NT2 with a target price of 28,000 dong/share for 2022 (equivalent to 13.0% upside from June 28, 2022) based on the method of EV/EBITDA target = 6.0x.

Forecasting business results

▪ BSC forecasts NT2 net revenue and NPAT in 2022 will reach 8,630 billion VND (+40% yoy) and 594 billion VND (+11% yoy), EPS FW 2022 = 2,064 VND/share, assuming: (1) Electricity production in 2022 will reach 4.60 billion kWh (+44% yoy) thanks to the recovery of gas power from the low level in 2021; (2) Fuel gas import price in 2022 will reach 8.2 USD/MMBTU and (3) Financial expense is 17 billion VND (-66% yoy), in which mainly interest expense for working capital loans.

Investment perspective

▪ Expectations of recovery in NT2's business results when power output recovers in 2022 compared to the low of 2021.

▪ CGM electricity price is expected to continue to remain at a high level (+38.1% yoy 5M/2022).

Investment risk

▪ Gas-fired thermal power output may continue to face competition from renewables

Business Update

▪ Net revenue and net profit of NT2 in 1Q2022 reached 2,007 billion VND (+22% yoy) and VND 159 billion (+39% yoy) respectively, thanks to: (1) relatively positive commercial electricity volume of 994.8 million kWh (+4% yoy), along with (2) increase in electricity price, the average is 2,004 VND/kWh (+20% yoy).