Why PV Power has no plans to IPO subsidiaries

PV Power said it has no plans to launch initial public offerings (IPOs) for key subsidiaries or reduce ownership below 51%, as the company prioritizes long-term cash flow preservation and financial capacity ahead of a new LNG investment cycle.

The decision comes despite favorable stock market conditions that have encouraged several major Vietnamese corporations, including Hoa Phat Group (HoSE: HPG), Mobile World Investment (HoSE: MWG), and Hoang Anh Gia Lai (HoSE: HAG), to IPO or list subsidiaries in recent years.

At its 2026 annual general meeting, PV Power management said the company had assessed the possibility of divesting stakes in subsidiaries such as PV Power Ca Mau, PV Power NT and PV Power Vung Ang, but concluded that an IPO at the current stage would not generate significant value compared with the long-term benefits these units provide.

According to management, most subsidiaries have completed major debt repayment obligations and entered a phase of stable cash-flow generation. Reducing ownership stakes could therefore deprive PV Power of substantial annual dividend income from efficiently operating power plants.

Executives also noted that changes in ownership structures could affect consolidated financial indicators and banking loan covenants.

The move signals that PV Power is prioritizing long-term cash flow stability and financial strength over short-term valuation gains from potential subsidiary IPOs.

The strategy comes as the company prepares to develop a series of large-scale LNG-to-power projects, including LNG Quynh Lap and LNG Vung Ang III, which are expected to require substantial capital investment.

LNG projects typically involve high upfront costs, long payback periods and strict financing requirements, prompting PV Power to maintain a strong balance sheet to support future borrowing capacity.

Instead of pursuing IPOs, the company is focusing on capital increases with support from Petrovietnam to fund its next investment cycle.

Late last year, PV Power completed a rights offering to existing shareholders at a ratio of 100:12 at VND10,000 ($0.38) per share, increasing charter capital to nearly VND30.68 trillion ($1.16 billion). As a result, management did not propose an additional capital raising plan at this year’s shareholder meeting.

The company also said it would continue withholding cash dividends for a fifth consecutive year in order to preserve resources for expansion projects.

Profit target already exceeded after five months

For 2026, PV Power targets revenue of nearly VND49.89 trillion ($1.89 billion), up 41% from 2025's actual level, while after-tax profit is projected to fall 63% to over VND1.12 trillion ($42.63 million).

However, the company has historically adopted conservative business plans and frequently exceeded its annual targets.

Management said that after the first five months of 2026, PV Power had already achieved nearly half of its full-year revenue target and significantly surpassed the year's profit goal.

Total electricity output during the period reached 10.5 billion kWh, equivalent to 49% of the year's target, while estimated revenue reached VND23.96 trillion ($908.82 million), or 48% of the year's plan.

Pre-tax profit was estimated at around VND1.8 trillion ($68.28 million), exceeding the full-year target by 36%, according to company executives.

Even so, management noted that business performance in the second half of the year will depend heavily on operating conditions, particularly during the third quarter when electricity demand, weather conditions, and hydrological factors could fluctuate sharply.

Contracted electricity output allocated to PV Power plants totaled 11.13 billion kWh in the first half of the year and is typically lower in the second half, meaning a larger share of output may need to compete in the competitive electricity market, potentially increasing earnings volatility.

In addition, Vietnam’s meteorological agency has forecast the possibility of short-duration floods between June and August, which could limit hydropower generation efficiency and increase flood prevention costs.

For gas-fired thermal power operations, PV Power currently procures LNG through PV Gas, another subsidiary of Petrovietnam.

The company said LNG prices are likely to remain elevated and volatile over the next 12 months due to risks of global supply disruptions.

Although much of the fuel cost can be passed through to electricity selling prices, helping maintain relatively stable margins, persistently high LNG prices would still raise generation costs and reduce competitiveness in the power market.

Overall, PV Power’s strategy suggests the company is prioritizing preservation of cash flow from existing assets to build a financial foundation for its LNG investment cycle over the coming years.

While the approach may limit short-term market excitement linked to subsidiary IPO stories, it could strengthen the company’s long-term financial stability and cash-flow resilience.