POW - NT 3&4 sees positive developments on Qc, GSPA; huge capacity expansion pipeline - AGM Note

We attended POW’s AGM on April 22, 2025. Overall, management shared positive developments on Nhon Trach 3 & 4 (NT 3&4)’s contracted volume (Qc) and gas sales purchase agreement (GSPA), as well as negotiations with EVN on Vung Ang PPA and Ca Mau O&M expenses. POW also guides for a huge LNG-fired capacity expansion pipeline while expected minimal impact from President Trump’s recently announced tariff. 

• Conservative 2025 guidance: sales volume of 18.9 bn kWh (+13% vs 2024G, 84% of our full-year forecast), revenue of VND38.2tn (+20% vs 2024G, 85% of our full-year forecast), and NPAT before MI of VND439bn (-47% vs 2024G, 28% of our full-year forecast). POW has beaten its NPAT before MI guidance by 78% over the last five years on average. 
• The AGM approved no dividend payment for 2024 or 2025, which is within our expectation as POW needs cash to fund its capex-heavy NT 3&4 projects as well as upcoming power plants. 
• 2025 capex guidance is VND9tn vs our projection of VND8.6tn. 
• We see slight upside to our 2025F PBT forecast due to a potential VND381bn receipt of Ca Mau O&M expenses in Q2, pending a fuller review. POW expects to receive VND381bn for O&M expenses related to Ca Mau in Q2 2025, which we currently project the company to receive in 2026F.  Guidance for Ca Mau plant’s 2025 output is ~73% of our forecast but we see no risk as NMSO will mobilize ~8% more from this plant given its cheap gas price. In addition, the potential upward revision in Vung Ang’s PPA poses slight upside potential to our long-term earnings forecast.
• We currently have a MARKET PERFORM rating for POW with a target price of VND12,900/share.

We believe POW’s 2025G sales volume is significantly conservative given its Q1 result. Its guidance reflects almost YoY flat volume from existing power plants (excl. NT 3&4) while Q1 volume increased 22% YoY. PBT guidance is also conservative as preliminary Q1 PBT was VND385bn (+38% YoY, 78% of its 2025G, and 21% of our full-year forecast), and POW expects the actual Q1 PBT to be higher than the preliminary figure. Q1’s preliminary Qc was strong at 86%, up from 67% in Q1 2024.

POW’s management expects minimal impacts on their 2025 business from President Trump’s tariff. POW estimates national power consumption growth to moderate to 3% p.a. in the case of the tariff, lower than our projection for 10% growth. However, POW expects minimal impacts on its business as its Q1 2025 sales volume still grew 22% YoY amid national demand growth of 4% YoY.

Huge capacity expansion pipeline, focusing on POW’s strength, which is gas/LNG-fired plants, while detailed ownership has not yet been disclosed. All of the below four projects were approved in the Revised PDP VIII.

• LNG Quang Ninh (30%-stake, 1,500 MW, Quang Ninh Province): MoIT approved FS in December 2024, Quang Ninh provincial authorities are conducting land clearance as of April 2025. 
• LNG Vung Ang III (1,500 MW, Ha Tinh Province): POW is conducting pre-FS.
• LNG Quynh Lap (1,500 MW, Nghe An Province): POW partners with SK E&S (Korean) and NASU (TH Group); submitted the investment proposal in September 2024.
• Ca Mau 3 (1,500 MW) and LNG terminal: acting as backup plan for approved LNG-fired power plants in the Revised PDP VIII, potentially sourcing gas from Block B or LNG. 
• POW is negotiating with VIC to produce equipment for electric vehicle charging stations. POW will develop and transfer these to VIC with good returns expected. The potential revenue and profit have not been disclosed.

Minimum Qc of 65% approved for NT 3&4: POW guides for minimum Qc volume of ~5.2bn kWh for NT 3&4 in the long run, broadly in line with our forecast. Management also shares the same view with our forecast, in which NT 3&4 would make losses in the first two years of operation and turn to profit in the third year. POW guides 2025 NT 3&4 sales volume of 2.5bn kWh. However, NSMO plans to mobilize 4bn kWh, reflecting no risk to our forecast of 3.1 bn kWh. 

Shareholders approve an LNG Sales Purchase contract (GSPA) with GAS: Committed an LNG purchase volume with GAS at 530mn cbm/year for the first five years (20,700,000MMBTU/year) ~ 39% LNG demand for NT 3&4 at full ultilization of 68%. In another positive development, following the recently approved 65% minimum contract ratio for Qc, POW will raise this committed LNG purchase volume from GAS, per POW’s management.   

POW is set to negotiate the PPA for Vung Ang with EVN in May 2025, aiming for a higher tariff. Specifically, 90% of actual capex has now been finalized—higher than the amount previously used in earlier PPA discussions. POW will negotiate the PPA based on this finalized 90%, with the remaining 10% to be addressed in later negotiations. 

POW’s 2025 guidance vs Vietcap’s forecasts

Source: POW, Vietcap

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