Electricity stocks are 'glowing'.

Electricity sector stocks surge.

Widespread heatwaves are making the issue of electricity shortages more frequently discussed, with many areas experiencing continuous power outages.

Conversely, the surge in electricity production has led to a sharp increase in the share prices of many electricity companies recently.

In the trading session on June 5th, despite heavy selling pressure on the market, many electricity sector stocks still recorded significant gains. The most notable was PPC of Pha Lai Thermal Power Joint Stock Company.

At the close of trading on June 5th, PPC shares rose by 750 VND/share, equivalent to 4.79%, to 16,400 VND/share. Over the first three trading sessions of June, PPC shares increased by 900 VND/share, equivalent to 5.8%. This added 294 billion VND to the market capitalization of Pha Lai Thermal Power Plant.

Shares of Hai Phong Thermal Power Joint Stock Company (HND) also rose significantly after a series of days with slight declines or slight increases. At the close of trading on June 5th, HND increased by 500 VND/share, equivalent to 3.31%, to 15,600 VND/share.

Similar to HND, shares of NT2 (Nhon Trach 2 Petrochemical Power Joint Stock Company) and POW (Vietnam Petrochemical Power Corporation) recorded their first strong gains on June 5th after a relatively long period of sideways movement. NT2 increased by 700 VND/share, equivalent to 2.13%, to 33,600 VND/share, while POW increased by 300 VND/share, equivalent to 2.2%, to 13,950 VND/share.

Hydropower plants face difficulties.

PSI Securities has released its forecast for the electricity sector. However, not all sectors will benefit from increased consumption.

Specifically, PSI forecasts electricity consumption growth in 2023 to reach approximately 7.8 – 8.0%, based on a projected GDP growth rate of around 6.0 – 6.5% in 2023.

Renewable energy projects are developing primarily in the central and southern regions due to suitable natural conditions. Conversely, capacity growth in the northern region is very slow, while electricity consumption there has been trending upwards in recent years.

"Therefore, we believe that the North may face electricity shortages in 2023," PSI forecasts.

Meanwhile, Vietnam Electricity Group (EVN) decided to adjust the average retail electricity price to 1,920.37 VND/kWh, an increase of 3% compared to the current level.

"We believe that increasing electricity prices could have a more positive impact on EVN's financial situation, ensuring cash flow for payments to power plants and creating room to attract higher-priced electricity sources," PSI stated.

Looking at each sector individually, PSI believes that hydropower will face difficulties, gas-fired thermal power will benefit, coal-fired thermal power will be utilized to its maximum capacity, and renewable energy will maintain its output.

PSI reports that sea surface temperatures in the Pacific region are trending upwards, and forecasting models indicate a 60% chance of El Niño occurring later this year, which could mean a year of declining average rainfall in the region.

Looking at each sector individually, PSI believes that hydropower will face difficulties, gas-fired thermal power will benefit, coal-fired thermal power will be utilized to its maximum capacity, and renewable energy will maintain its output. (Illustrative image)

According to IRI, the La Nina phenomenon will only last until the end of the first quarter of 2023, after which the climate will gradually shift to a neutral state and the El Nino phase will appear from May 2023. Therefore, PSI believes this will negatively impact the output of hydropower plants due to lower water inflow into reservoirs.

In the coming period, river flow in the Central and Central Highlands regions is forecast to be 10-60% lower than the same period last year due to the generally shorter river lengths and the negative impacts of El Nino in the upstream areas of Laos. Conversely, major rivers in the North, originating from snow-capped mountains in Yunnan, will experience less severe effects from El Nino.

"Therefore, we believe that hydropower projects in the Central and Central Highlands regions will face more difficulties than in other regions," PSI analyzed.

Meanwhile, gas-fired power plants are benefiting. Positive factors for gas-fired power plants include falling global oil prices, leading to a decline in Singaporean MFO oil prices; and the recovery in industrial production in the South in the near future, which will help increase demand there again, etc.

PSI assesses that, given the instability of renewable energy due to its high seasonality and the declining benefits of hydropower due to climate change, we believe that gas-fired thermal power plants will be heavily utilized in 2023.

In 2023, PSI predicted that coal-fired power generation would increase significantly due to a slight rise in electricity demand, with coal-fired power remaining the primary base power source due to its low cost and high stability. Simultaneously, hydropower generation would decrease due to climate change.

Regarding renewable energy, PSI still believes that the sector will be able to maintain its output in the coming period.

Source: https://www.congluan.vn/nang-nong-co-phieu-dien-phat-sang-post250513.html