Water Sector Update - Slow economic recovery to weigh on 2024 water consumption

Binh Duong’s water sales volume growth to be weak in 2024 but long-term growth outlook remains bright. We have revised our 2023 volume growth forecasts for BWE and TDM to 2% and 0% respectively, compared to our previous forecasts of 3.5% and 3.0%. This adjustment is due to lower-than-expected water demand in Binh Duong during 9M 2023. Additionally, we have reduced our 2024 volume growth forecasts for BWE and TDM from 12% to 5% given management’s concern about the pace of economic recovery in 2024. However, we forecast a 10% CAGR increase in volume in 2023-2027, which is more than twice that of Vietnam’s water growth rate. Recently, FiinResearch (a market research service provider in Vietnam) forecasted Vietnam’s piped water demand to increase at a CAGR 2023F-2027F of 4.3%. Furthermore, management is pursuing a water tariff hike of 3% p.a. from 2024 through 2028.

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