On November 9, Vietnam Electricity Group (EVN) decided to adjust the average retail electricity price to VND2,006.79/kWh (excluding VAT), an increase of 4.5% compared to the current retail price. This is the second increase this year, bringing the total electricity price increase to 7.5%.
Assessing the impact of the electricity price increase on businesses in this industry, Mr. Luu Tri Khang - Head of Proprietary Trading Department, Kien Thiet Securities Company - said that most electricity production businesses will not benefit in the short term. The reason is that they have signed electricity supply contracts with EVN before, even according to each roadmap.
"Maybe in the long term, when electricity prices are high, when new electricity purchase contracts are signed, these businesses will benefit. Only electricity distribution businesses will benefit from the difference between the previous contract signed and now sold at a higher price," Mr. Khang analyzed.
According to observations from the expert group of MB Securities Company (MBS), the trend of sharp increase in receivables in electricity enterprises has started since 2022, when the world input price increased sharply and EVN encountered financial difficulties. In particular, many prominent thermal power enterprises on the stock exchange recorded the sharpest increase in receivables with EVN due to high electricity prices such as Vietnam Oil and Gas Power Corporation (HOSE: POW), Power Generation Corporation 3 (HOSE: PGV), Nhon Trach 2 Petroleum Power Joint Stock Company (HOSE: NT2), Quang Ninh Thermal Power Joint Stock Company (UPCOM: QTP), Hai Phong Thermal Power Joint Stock Company (UPCOM: HND). These are also enterprises that record high receivables/total assets ratios in the industry.
"This electricity price increase will help EVN earn about VND26,000 billion in additional revenue for 2024, thereby supporting the improvement of EVN's solvency as well as the business cash flow and financial efficiency of the above thermal power enterprises" - MBS assessed.
Experts also predict that power construction and installation enterprises will benefit. The period of 2022 - 2023 is a difficult time for power infrastructure construction enterprises when they cannot sign new construction and installation contracts from EVN and the cash flow for projects is also interrupted. Many enterprises recorded low construction and installation revenue results, the value of newly signed backlog is not high when EVN continuously cuts investment costs, repairs and maintenance for the power system.
"With a large demand for work to develop the power grid, averaging about 1.5 - 1.6 billion USD per year, EVN needs to stabilize its cash flow soon to make this happen. Construction activities will be more active and prominent businesses on the stock exchange such as Vietnam Electricity Construction Corporation (HOSE: VNE), PC1 Group Corporation (HOSE: PC1), Power Construction Consulting Corporation 2 (HOSE: TV2) will benefit" - MSB commented.
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