Vietnam hydropower firms see robust Q3 profit growth

Hydropower developers in Vietnam posted strong year-on-year profit growth in Q3/2024, thanks to higher electricity consumption and favorable hydrological conditions.

Thac Ba Hydropower Joint Stock Company, listed on the Ho Chi Minh Stock Exchange (HoSE) as TBC, reported Q3 revenues of VND192.7 billion ($5.1 million), up 135% year-on-year. Its net profits rose 326.18% to VND99.3 billion ($3.91 million).

TBC attributed this strong performance to an increase of 89.9 million kWh in electricity output and an average selling price of VND843 ($0.02) per kWh in the quarter, compared to VND410 per kWh during the same period last year.

Additionally, revenue from technical services and financial activities grew 14% and 48%, respectively, further contributing to the company's strong business results.

For the first nine months of 2024, TBC's net profit hit VND179.8 billion ($7.08 million), up 37.67% year-on-year, making it the only hydropower company with positive nine-month profit growth.

Central Hydropower Joint Stock Company (HoSE: CHP) reported Q3 net profits of VND55.3 billion ($2.2 million), up 213.75% year-on-year.

The company said favorable hydrological conditions and effective reservoir water management had contributed to the result. In addition, its interest expenses had decreased due to repayment of maturing loans.

Similarly, A Vuong Hydropower Joint Stock Company (UPCoM: AVC) reported good business results thanks to advantageous hydrological conditions. Its Q3 revenue rose 105.56% year-on-year to VND243.8 billion ($9.6 million), while net profits reached VND123.7 billion ($4.87 million), up 154% year-on-year; more than 2.6 times higher than the first half of the year.

Among hydropower companies reporting strong profits, Vinh Son-Song Hinh Hydropower Joint Stock Company (HoSE: VSH) has stood out as a special case.

Despite a modest 3.7% increase in Q3 net revenue, the company saw a significant 205% expansion in net profit to over VND77.9 billion ($3.07 million), three times higher than the same period last year. This result was driven by higher revenue from interest income on deposit contracts and reduced costs due to debt restructuring.

Some other hydropower companies, despite not reporting year-on-year profit growth, showed significant improvement in Q3 over the year’s previous two quarters.

For instance, Se San 4A Hydropower Joint Stock Company (HoSE: S4A) logged a net profit of VND50 billion ($1.97 million), down 16.67% from Q3/2023, but a substantial improvement from a loss of VND1.9 billion in Q2 and a profit of VND12.9 billion in Q1.

The business outlook for hydropower companies is more positive than last year. In a recent report, broker Viet Dragon Securities forecast total electricity consumption to reach 275 billion kWh this year, up 9.5% year-on-year. It also expected a growth rate of 8% in 2025.

Hydropower's share of the country's total electricity output is predicted to rise in 2025, thanks to favorable hydrological conditions created by the La Nina weather phenomenon, the report said.

It also projected LNG thermal power to grow, with coal-fired thermal power having little room for expansion (reaching 29.5 MW in the first half of 2024, compared to a maximum capacity of 30.1 MW by 2030).

Another broker, VPBank Securities, said La Nina was expected to be active from August to December 2024, with a likelihood of 66-74% and continue until April 2025 (with a probability of 44%). This phenomenon would benefit hydropower plants, allowing them to improve on their 2023 performance.

La Nina is a natural climate pattern that influences global weather marked by cooler than average ocean temperatures in the equatorial Pacific.

The broker forecast hydropower production in 2024 at 84.1 billion kWh, up 4% year-on-year, despite unfavorable hydrological conditions in the first half of the year.

According to state utility Vietnam Electricity (EVN), the nation’s electricity production and imports totaled 24.56 billion kWh in September, taking the total of first nine months to 232.6 billion kWh, up 10.9% from the same period in 2023.

Hydropower and thermal power (coal- and gas-fired) were the main power sources during the period, accounting for 65.57 billion kWh and 132.46 billion kWh, or 28.2% and 57% of the total output, respectively.

Notably, hydropower generation rebounded in Q3 after being low in the first two quarters, hitting 36.94 billion kWh thanks to the passing of the El Nino cycle. Hydropower generation in Q1 and Q2 reached 10.62 billion kWh and 18.01 billion kWh, respectively.