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PV Power's profit to grow due to power shortages
Nguyen Tung 17:10, 2018/05/16
Power shortages could be more severe than estimation, indicating a promising long-term outlook for PetroVietnam Power (PV Power), said a report by Viet Capital Securities (VCSC).
In its latest estimation, Electricity Vietnam (EVN) expected the growth rate of power supply to be under 5% in the next 2 years, which is significantly lower than the estimated power consumption growth rate at 10-11%, said VCSC.
 
PV Power's profit is expected to grow due to power shortages.
PV Power's profit is expected to grow due to power shortages.
As at the end of March, the price at competitive electricity generation market (CGM) has reached its ceiling as EVN expected the power consumption growth rate to go up 12.5% by the second quarter. 
The severe power shortages may force EVN to mobilize the operation of fossil fuel power station, in which the price offering is 3 times higher than that of PV Power's thermal plants. 
Another factor contributing to the positive outlook of PV Power is the slowing down in Ca Mau plant's depreciation starting the second quarter. 
"In recent exchange, PV Power informed Ca Mau plant' depreciation will reduce from US$50 million in 2017 to US$31 million in 2018, and being almost insignificant from 2019 afterwards," VCSC said. 
PV Power has recently been granted government approval to build two gas-fired electricity plants in southern Vietnam at a total cost of nearly US$1.5 billion, its parent company said on April 24.
The Nhon Trach 3 and Nhon Trach 4 plants will have a combined capacity of 1,500 megawatts (MW) and will cost VND33.3 trillion (US$1.46 billion) to build, PetroVietnam said. They are scheduled to start power generation in 2020 and 2021 respectively.
The Government has raised US$308 million (VND6.996 trillion) by selling 20% of PV Power in an initial public offering (IPO) on the Hanoi Stock Exchange on January 31. With total shares offering of 468 million shares and initial price of VND14,400 (US$0.6) per share, the proceeds were 4% higher than the government's expectations of at least $295 million from the IPO. 
VCSC forecasted PV Power's core profit growth rate in 2018 will reach 17.1%, higher than previous estimation of 12.9%. 
Additionally, the company's profit estimation in 2019 and 2020 is projected at 29.6% and 16.6%, respectively. 
Vietnam is one the fastest growing electricity markets in Southeast Asia, with an average growth demand in the next 3 years expected at 10%. PV Power, thus, expects to increase its current supply of 12% of the country's total electricity produciton to15% by the end of 2026. Under its own assumptions, by that time, PV Power's electricity generation capacity will increase by 160% from 4,208 to 10,958MW, mainly thanks to the construction of thermal power plants. 
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