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Investors looking forward to green energy stocks in 2022

With a solid financial foundation, bright prospects in the medium and long term, stocks of renewable energy companies are attracting more and more investors.

 

 

Multinational Investment & Development JSC's workers install a rooftop solar power system for a frozen seafood factory in Dong Thap Province. Analysts forecast renewable energy stocks still have much room for growth in the long term. 

 

According to statistics from January last year to January this year, stocks of renewable energy companies all grew significantly, Truong Thanh Energy and Real Estate JSC (TEG) grew 175.59 per cent, Licogi 13 JSC (LIG) rose 167.21 per cent, Gelex Group JSC (GEX) gained 163.28 per cent, Fecon JSC (FCN) increased 142.02 per cent, Bamboo Capital Joint Stock Company (BCG) rose 141.22 per cent.

"There are a few reasons why renewable energy stocks have risen sharply in recent times, such as predictions that this power source will account for the largest proportion in the total capacity of Viet Nam's power sources. The commitment of the Vietnamese Government to achieve net emissions of "zero" in the recent COP26 is a great motivation for businesses to continue participating in and expanding the exploitation of renewable energy sources, namely solar power, wind power,” said Ha Duc Tung, analyst of VNDirect Securities JSC.

Bamboo Capital Joint Stock Company (BCG) has signed cooperation deals with international enterprises like Siemens Gamesa Renewable Energy, SP Group, Sembcorp Utilities. Gelex Group JSC (GEX) has established a subsidiary named Gelex Electrical Equipment JSC specialised in renewable energy listed on UPCOM.

Many enterprises have positive business results in the first nine months of 2021. Truong Thanh Energy and Real Estate JSC (TEG)’s nine-month revenue reached VND199.4 billion, up nearly 44 per cent over the same period last year. The company's net profit reached more than VND19 billion, an increase of more than 2,300 per cent - the highest growth rate of profit after tax among renewable energy companies.

Bamboo Capital Joint Stock Company (BCG)'s net profit in nine months reached VND701 billion, up nearly 579 per cent over the same period last year. According to BCG, this growth was achieved thanks to the cash flow earned from renewable energy projects that were energised at the end of 2020.

Gelex Group JSC (GEX) earned a profit of VND1.16 trillion, up 81.3 per cent, KOSY Joint Stock Company (KOS) reported VND15 billion, up 68.9 per cent, Alpha Seven Group JSC (DL1) achieved VND35 billion, up 57.3 per cent.

In terms of efficiency per dollar spent, Bamboo Capital Joint Stock Company (BCG) ranked first with return on equity (ROE) reaching 13.74 per cent, followed by Power Construction JSC No.1 (PC1) (12.52 per cent), Refrigeration Electrical Engineering Corporation (REE) 12.27 per cent, Gelex Group JSC (GEX) 8.56 per cent.

As for the return on asset (ROA), Refrigeration Electrical Engineering Corporation (REE) was the champion as its ROA reached 6.68 per cent, followed by Power Construction JSC No.1 (PC1) 4.78 per cent, Sao Mai Group Corporation (ASM) 3.26 per cent and Truong Thanh Energy and Real Estate JSC (TEG) 3.02 per cent.

Many analysts forecast renewable energy stocks still have room for growth in the long term.

Yuanta Securities Vietnam Joint Stock Company forecast that electricity demand will grow by 9.8 per cent per year to support the expected GDP growth in the 2021-2030 period from 6.5-7.0 per cent.

With the same opinion, Agriseco Research assesses that the electricity industry will achieve good growth this year following the recovery of the economy. In the medium and long term, thermoelectric power and renewable energy are expected to gradually replace traditional energy sources such as coal and hydroelectricity.

Under the Government's plan, the installed capacity of solar and wind power will reach 35GW and 41GW by 2045, accounting for 20 per cent and 23.3 per cent of the total installed capacity of power sources in the country. Thanks to the incentives on electricity generation prices, the capacity of solar power has reached 16,500 MW.

According to Agriseco Research, thanks to the application of technology and price competition among the world's turbine and solar cell suppliers, net costs, which include installation costs, management costs, operation management, repair costs, in the life cycle of renewable energy projects tend to decline sharply.

As a result, the installation costs of solar and wind power projects onshore may be cheaper than coal power projects in the next few years when the equipment market is saturated.

Meanwhile, in a recent analysis report, VNDirect Securities JSC highly valued the stocks of companies with renewable energy projects with attractive preferential feed-in-tariff (FIT) mechanism prices and low-cost development.

The government's supportive policies may facilitate wind power companies to develop in the future such as Ha Do Group JSC (HDG), Gelex Group JSC (GEG), Refrigeration Electrical Engineering Corporation (REE) and Power Construction JSC No.1 (PC1).

Source: VNS

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