Valuation
§ BSC offers a BUY recommendation for PC1 stock with a target price of VND 45,900/share for 2022 (equivalent to an upside of 17.0% compared to June 23, 2022) based on the partial valuation method (SOTP).
Forecasting business results
§ BSC forecasts that revenue and net profit of 2022 will reach VND 10,233 billion (+4% yoy) and VND 919 billion (+20% yoy), respectively, EPS FW 2022 = VND 3,714/share with the assumption: (1) value of newly signed EPC contract in 2022 +30% yoy, (2) hydroelectricity's electricity production increased by 14.3% thanks to the still positive hydrological situation, and (3) the amount of electricity produced by the wind power segment increased sharply by +242.9% thanks to the operation throughout 2022.
Investment Thesis
§ Hydropower segment continues to benefit from favorable hydrological conditions.
§ Wind power segment is positive thanks to additional capacity when operating full-time in 2022.
Catalyst
§ Real estate project PC1 Gia Lam and PC1 Dinh Cong are likely to be completed in the fourth quarter of 2022. Copper-Nickel mining project is expected to operate from the fourth quarter of 2022.
Risks
§ Construction segment dropped more than estimated when renewable projects lacked strong growth momentum like 2021.
§ Wind power production is lower than estimated.
Updated business results
In 1Q2022, PC1 recorded net revenue = 1,478 billion VND (-5% yoy) and net profit = 179 billion VND (+125% yoy), thanks to: (1) Revenue from electricity segment increased strongly (+299% yoy), (2) Revenue from industrial segment increased strongly (+932%), although (3) Net revenue and Gross profit from construction activities fell sharply (-57% yoy and -69% yoy), and (4) financial expenses increased sharply (+102% yoy).
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