Power tickers anticipate rosier future

According to statistics from FiinGroup, a local provider of financial data and analytics,money flowing into the stock market this year has mainly been channelled into the banking and securities, steel, food, retail, software and warehousing, and logistics sectors.

Due to their fairly low return-on-equity ratio, tickers in the power sector have been seemingly neglected over the past few months compared to other sectors in an uptrend market. These tickers, however, are expected to become more appealing in the coming months.

On April 2, a raft of power producers and infrastructure contractors saw their stock prices climb with surging sales volumes.

That is mainly because on April 1, Deputy Prime Minister Tran Hong Ha signed an implementation strategy for the country's Power Development Plan (PDP8).

The prime target is to shift traditional power sources to cleaner sources such as LNG, wind power, or solar power.

State-owned power group Vietnam Electricity (EVN) got the thumbs-up to revise power prices every three months, instead of every six months as previously.

EVN could increase electricity prices by a minimum of 5 per cent from now until the end of the year, contributing to improving the financial health of the group and businesses in the sector in the short term.

MB Securities JSC believes that the new mechanism will positively affect the power sector’s value chain, especially as EVN is currently the main power buyer and seller.

Increasing power prices could enhance EVN’s ability to pay power generators. Accordingly, thermal power plants, such as POW, PGV, NT2, QTP, would be relieved of financial pressure thanks to this mechanism.

The power sector is stepping into the peak dry season which is the most stressful time of the year in terms of power supply.

In March, the entire system's power output reached 25.7 billion kWh, up 9.8 per cent on-year, bringing the entire power output in the first quarter of this year to 69.4 billion kWh, showing an 11.8 per cent jump on-year.

EVN expects average electricity consumption in April to reach 865.7 million kWh a day, up 10 per cent on-year.

The approval of PDP8 and the application of the new power price adjustment mechanism are positive developments for the sector.

According to Do Hong Van, head of FiinGroup’s analysis team, banks, securities, and steel groups that have guided the market recently are showing signs of their cash streams going down after reaching their peak. Meanwhile, the group of power tickers is maintaining value at almost the lowest level in the past year.

This has placed the power ticker group on the watch list of analysts and investors.

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