Valuation
§ BSC recommends BUY for VSH with a target price of VND 35,000/share for 2022 (equivalent to 26.6% upside compared to September 30, 2021) based on valuation method EV/EBITDA = 9.0x (equivalent to EV/EBITDA = 9.0x). average rate of enterprises in the same industry).
Forecasting business results
§ n 2021: BSC forecasts revenue and net profit of VND 1,563 billion (+359% yoy) and VND 379 billion (+101% yoy), respectively, EPS FW 2021 = VND 1,603/share base on assumptions: (1) Output Electricity produced in 2021 can reach 1.75 billion kWh (+213% yoy), of which Thuong Kon Tum contributes 870 million kWh and (2) The PPA electricity price in 2021 of Thuong Kon Tum factory can reach VND 914 /kWh.
§ In 2022: BSC forecasts revenue and profit after tax of VND 1,813 billion (+16% yoy) and VND 420 billion (+11% yoy) respectively, equivalent to EPS = VND 1,777/share based on assumptions: (1) Electricity production in 2022 can reach 1.85 billion kWh (+6% yoy), of which Thuong Kon contributes about 1.04 billion kWh (+20% yoy) and (2) Negotiate electricity price of Thuong Kon Tum successfully, the PPA electricity selling price from 2022 can reach VND 1,097/kWh (+20% yoy).
Investment Thesis
§ VSH's business results have favorable prospects thanks to the stable hydrological situation until mid-2022.
§ Thuong Kon Tum Hydropower Plant is a very important contributor to VSH's business results.
Risks
§ Risk of weather disrupting production activities of VSH.
Company Update
§ Net revenue and NPAT in 1H2021 reached VND 689 billion (+656% yoy) and VND 237 billion (75 times yoy%) respectively, thanks to (i) favorable hydrological situation which helps in production +323% yoy and (ii) hydrological situation. Thuong Kon Tum power (220 MW) has been operating since the beginning of Q2, increasing the amount of operating capacity for VSH.
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