According to the Ministry of Industry and Trade, the production index of the electricity manufacturing and distribution industry in the first nine months of the year increased by 2.8% over the same period. Commercial electricity in September was estimated at 19,180 million kWh, up 4.3% over the same period; in 9 months, commercial electricity was estimated at 161,555.9 million kWh, up 2.6% over the same period.
According to experts, the stronger economy is creating momentum for the power industry to continue to recover and grow in the last months of the year. Accordingly, GDP in the third quarter of 2020 increased by 2.62% over the same period in 2019, thereby raising the GDP growth of 9 months to 2.12%. Currently, the Government is determined to accelerate the process of economic recovery, striving to achieve growth of 2.5-3% in 2020.
The report on production and business trends of enterprises in the processing and manufacturing industry in the third quarter conducted by the General Statistics Office recently showed that up to 82.3% of enterprises forecast that the number of new orders would increase or decrease. stable in the sixth quarter compared to the third quarter. Another indicator that manufacturing is recovering is that the Purchasing Managers’ Index (PMI) of Vietnam’s manufacturing sector rose to 52.2 points in September, the highest in ASEAN.
That is the reason why Ban Viet Securities (VCSC) kept the assumption that the global economy – along with Vietnam – will continue to impressively recover in the second half of 2020 until 2021. The National Monetary Fund The economy (IMF) also forecasts that Vietnam’s GDP growth will reach 7% in 2021 mainly from the strong recovery of the industrial production sector.
It is assumed that Vietnam’s GDP growth rate will return to pre-Covid-19 outbreak levels of about 6%-7% from 2021 onwards and industrialization will continue to be the driving factor for the momentum. With the development of the Vietnamese economy, VDCS estimates, Vietnam is likely to record electricity consumption growth at 8%-9% per year in the period 2021-2025 – in line with consumption growth. electricity is typically about 2 percentage points higher than GDP growth.
The Viet Nam Power Sector Master Plan further reinforces this assumption. According to the preliminary forecast of the Ministry of Industry and Trade published in March 2020, Vietnam’s peak electricity demand in the period 2020-2025 will increase by 8.6% per year under the base scenario and 9.1 % per year under the positive scenario. In which, renewable energy will play a more important role in Vietnam’s power generation system. The Ministry of Industry and Trade proposed that Vietnam will increase renewable power generation capacity from about 8,000 MW in 2020 to about 20,000 MW in 2025 under the base scenario and about 32,000 MW in 2025 under the positive scenario.
With this trend, Refrigeration Electrical Engineering Corporation (REE) is an attractive destination. The company is currently planning to double its power generation capacity (37% of forward NPAT in 2020) from 515 MW in 2019 to 1,000 MW in 2025 mainly driven by a series of investments in rooftop solar and wind power projects. Power Construction Joint Stock Company 1 (PC1) is also an attractive stock for investment opportunities in Vietnam’s renewable energy sector thanks to its three major wind power projects (total capacity of 144 MW) expected to start. operating by the end of 2021, helping to double PC1’s power capacity to 300 MW by 2022. The power generation segment (37% of NPAT after minority interest for 2020) will account for most of NPAT after profit. Projected minority interest of PC1 from 2022.
With coal power, opportunities are also opening up. In both the base and positive scenarios, the Ministry of Industry and Trade proposes that Vietnam continue to increase coal power capacity from 19,637 MW in 2020 to 38,842 MW in 2025 (corresponding to an average growth rate of 14.6 % each year). This orientation will help Pha Lai Thermal Power JSC (PPC) and Nhon Trach 2 Petroleum Power Joint Stock Company (NT2) continue to operate with high efficiency and pay increased cash dividends each year.
In which PPC has always been considered an attractive defensive stock with potential to increase valuation and 2 large investments – HND and QTP – are located in favorable locations with the highest growth in electricity consumption in Vietnam in the cluster. North industry. NT2 is one of the most efficient gas power plants in Vietnam with gas consumption per kWh that is about 10% lower than competitors. In addition, the two companies mentioned above also had the opportunity to record profits beyond the plan thanks to the completion of maintenance work at a lower cost than expected.
