Thermal power companies (NT2) face stiff competition from renewable energy

Demand for electricity is soaring amid the peak of the hot season but stocks of thermal power companies still struggle as their power output is being strongly impacted by the development of renewable energy.

 

The intense heatwave has caused the country's electricity demand to skyrocket. According to Vietnam Electricity (EVN), the national electricity consumption has set a new peak at 42,146MW. Power consumption in the North and in Ha Noi has also set new records of 18,700MW and 4,700MW, respectively.

SSI Securities Company said in the first five months of this year, renewable energy sources took about 13 per cent of total consumption from traditional energy sources. The consumption of thermal power has also been reduced due to favourable hydrological conditions for hydropower plants to operate.

Hai Phong Thermal Power Joint Stock Company (HND) said that the electricity output in Q2 reached 95.5 per cent of the quarter’s target. Profit in the quarter reached VND166 billion (US$7.2 million). But in the first quarter, the company suffered a loss of VND11.2 billion, mainly due to the decrease in actual power output.

In the group of thermal power businesses, gas power companies have become less competitive than coal power companies. Power output from gas power plants in the first five months decreased by 16.8 per cent over the same period last year.

Profits of Nhon Trach 2 Thermal Power Joint Stock Company (NT2) have been relatively low in recent quarters. NT2 leaders attributed this to the participation of renewable energy in the country’s power system.

In 2021, NT2 plans to produce 4.6 billion kWh of electricity, with total revenue of VND7.7 trillion and profit after tax of VND462.2 billion. With this plan, NT2 revenue is estimated to increase by 26.8 per cent but profit will fall by 26 per cent compared to last year's performance.

According to SSI, in the context of rising gas prices, the average selling price of electricity from gas power plants has exceeded that of coal power plants since the beginning of 2021.

A series of thermal power stocks such as Pha Lai Thermal Power Joint Stock Company (PPC), PetroVietnam Power Nhon Trach 2 Joint Stock Company (NT2) and Hai Phong Thermal Power Joint Stock Company (HND) have undergone strong declines.

PPC has lost 14.2 per cent in the last three months and remains almost flat compared to the beginning of this year. NT2 has declined 16.2 per cent compared to early this year and HND has decreased by 6.25 per cent.

Renewable energy

Some renewable power stocks have recorded good gains since the beginning of this year.

Vinh Son-Song Hinh Hydropower JSC (VSH) has risen nearly 16 per cent since early this year. Da Nhim – Ham Thuan – Da Mi Hydro Power Joint Stock Company (NDH) increased by 15 per cent.

In the context of prosperous renewable energy development, Bamboo Capital Joint Stock Company (BCG) is focusing on developing wind power projects and rooftop solar power projects, with the goal of completing a 200MW of solar power in 2021.

Truong Thanh Development and Construction Investment Joint Stock Company (TTA) has set a revenue target of VND680 billion, profit after tax of VND150 billion, up 37 per cent and 16.2 per cent, respectively compared to last year.

The company said its power plants had stable operation and Phuong Mai Wind Power Plant project, invested by TTA and the associated company, was expected to come into operation in the second quarter of this year.

At the end of the first quarter, TTA recorded profit of VND31 billion, double that of the same period last year, because it had two plants coming into operation in the quarter, namely Pa Hu Hydropower and Ho Nui Mot Solar Power.

At Sao Mai Group Corporation, revenue from solar power has contributed positively to the business in recent years. In 2020, this business segment brought in VND515 billion of profit for ASM, reaching 136 per cent of the yearly plan and up 227 per cent year-on-year.

In 2021, ASM sets a target of VND13 trillion in revenue, VND700 billion in profit after tax, and 10-20 per cent dividend payout ratio.

bizhub

ASM 15,850 -200 -1.25%
BCG 18,500 200 +1.09%
HND 18,100 -200 -1.09%
NT2 21,350 800 +3.89%
PPC 23,300 400 +1.75%
SSI 42,100 -700 -1.64%
TTA 15,300 -300 -1.92%
VSH 27,650 -350 -1.25%

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