Title POW_BUY_TP 12,000_Upside 20%_Overcoming difficulties_BSC Company Update
Report Type Phân tích công ty
Source BSC
Bussiness POW
Detail Date : 22/07/2021
Total pages : 8
Language : English
File Type : .PDF
FileSize : 337 Kb
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Short Content
Valuation
 BSC issues a BUY recommendation for POW stocks with a target price of VND 12,000/share, 20% upside compared to the price on 11/15/2020. Valuation is based on EV/EBITDA method with the expectation that: (1) Sao Vang - Dai Nguyet field will start operating from the end of 2020 to help offset the shortage of gas for NT1 & NT2 power plants; (2) Vung Ang Plant continues to maintain stable operating performance and (3) favorable hydrological situation helps to boost the output of hydropower plants.
 
Forecast of business performance
BSC forecasts that in 2020 POW's net revenue and profit after tax will reach VND 
  • 29,740 billion (-15.9% YoY) and VND 2,263 billion (-20.7% YoY). EPS FW 2020 = 799 VND.
  • In 2021, BSC forecasts that POW's revenue and NPAT will reach VND 32,785 billion (+10.0% YoY) and VND 3,149 billion (+39.0% YoY) respectively, assuming (1) NT1 factory recovers in volume. , (2) Rainfall will increase again next year, helping to boost business results from POW's 2 hydropower plants and (3) No provision for bad debts at Ca Mau plan.
Catalyst
The market will receive new cash flows from investment funds according to the 
MSCI FM Index and MSCI FM 100 Index from November 2020 when Kuwait is 
upgraded. Accordingly, the proportion of POW shares in the iShare fund is 
expected to increase from 0.13% to 0.33% (Link).
 
Investment risks
  • (1) the increase in exchange rate affects the profit after tax of enterprises. 
  • (2) gas and coal price increase due to the limited domestic supply.
  •  (3) being competed by renewable energy power plants.
Financial result & business update
  • POW's revenue and NPAT in 9M/2020 reached VND 21,795 billion (-14% YoY) and VND 1,487 billion (-31% YoY), respectively. This decrease comes from the fact that NT2 factory had to stop for periodic maintenance, mobilized output from Ca Mau and NT1 plants was low due to gas shortage.
  • BSC believes that (1) the increase in rainfall at the end of the year will help the hydropower sector recover slightly, and (2) the NT2 plant will return to normal operation, ensuring the annual plan.