Samarang Ucits-backed Vietnam hydropower firm's Q2 net profit sinks 74% on El Nino

Vinh Son-Song Hinh Hydropower JSC, invested by Luxembourg-based Samarang Ucits-Samarang Asian Prosperity, saw its consolidated net profit slump by 74.3% year-on-year to VND67.1 billion ($2.68 million) in the second quarter of this year.

The firm, listed on the Ho Chi Minh Stock Exchange as VSH, reported VND412.5 billion ($16.47 million) in net revenue and VND88 billion ($3.51 million) in pre-tax profit in Q2, down 37.2% and 69.5% year-on-year, respectively.

The company attributed this downturn to El Nino's impacts, which caused lower water inflows to reservoirs in the central and Central Highlands regions than the previous year.

As a result, VHS’s Q2 commercial electric output plunged by 115.57 million kWh, or 22.5%, over the same period of last year.

In addition, the Q2 average selling prices of electricity offered by power plants in general were lower than those in the same period last year, so VSH’s revenue from electricity sales decreased by VND244.7 billion ($9.7 million), or 37.23%, year-on-year.

During the first half of this year, VSH posted a consolidated net profit of VND68.9 billion ($2.75 million) on revenue of VND762 billion ($30.4 million), down 90.6% and 50.8% year-on-year, respectively. These figures coincide with the company's H1 audited financial statement.

This year, the firm aims for VND1.96 trillion ($78.46 million) in revenue and VND505.2 billion ($20.17 million) in net profit, down 23.7% and 49.1%, respectively. With the H1 performance, VSH fulfilled only 13.6% of its 2024 profit goal.

In 2024, VSH is expected to expand the respective capacity of the Vinh Son hydropower project in the central province of Binh Dinh by 40 MW and the Song Hinh hydropower project in the adjacent province of Phu Yen by 70 MW. It will work with the Binh Dinh government to proceed with the Vinh Son 2 and 3 hydropower projects.

In terms of financial strategy, VSH will continue negotiating with banks to secure lower interest rates and restructure loans for the Thuong Kon Tum hydropower project in the Central Highlands province of Kon Tum.

As of June 30, VHS’s total assets declined 5.4% from the start of 2024 to VND9,017 billion ($360 million), and liabilities edged down 11.7% to VND4,359 trillion ($174 million).

The firm is currently 52.58% held by REE Energy, 30.55% by EVNGENCO 3, and 9.88% by Samarang Ucits-Samarang Asian Prosperity.

At the close of Thursday, VSH shares traded at VND51,500 ($2.06) each.