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- We cut our target price (TP) for POW by 16% but upgrade our rating from OUTPERFORM to BUY as its share price has dropped ~20% over the past three months. We view POW as a solid play on Vietnam’s resilient power consumption and structural transition to LNG with its upcoming Nhon Trach 3 & 4 LNG-fired plants targeted to come online in late 2024/mid 2025.
- Our lower TP is mainly due to a 21% decrease in our aggregate 2023-2027F NPAT-MI forecast (respective cuts of 28%/53%/9%/9%/15% for 2023/24/25/26/27F) which outweighs the positive impact of rolling our horizon to end-2024.
- Our lower aggregate 2023-2027F NPAT-MI forecast is due to (1) a 10% cut in the sector competitive generation market price assumption across the forecast period leading to declines in POW’s power plant CGM price assumptions, (2) 4% and 17% downward revisions in 2023 and 2024 sales volume assumptions based on the 9M 2023 result and a loosened power market outlook in 2024 (see our Thermal Power Sector Report dated October 25, 2023).
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