Summary of the 2021 H1 results of Binh Duong Water Environment JSC (BWE VN)
H1/2021 result highlights
- BWE’s net revenue inched slightly by 1.8% y/y, reaching VND1,450bn in H1/2021. Sales from its main revenue stream ‘water supplying’ was up by 13.9% y/y to VND984bn, while other businesses reported a mixed picture in their sales growth. As for the water supply business, the total clean water consumption grew 8.3% y/y to 86.4 million cubic meters in H1/2021. The total water production capacity was 720,000 cubic meters per day (m3/day) in H1/2021, leading to a capacity utilization of 69%.
- The gross margin improved by 2.5 percentage points to 43.1%, thanks to a higher sales contribution from the water supply segment. This area had a higher gross margin (56.6%) than areas such as waste management (16.7%) and others (13.1%). Net financial expenses declined thanks to the dividend from an affiliate and the reverted provisional expense from investment activity. All in all, net profit increased by 39.4% y/y to VND347bn in H1/2021.
- We maintain our positive outlook on water demand in Binh Duong province thanks to the rising demand from industrial customers and the solid organic growth from residential customers. With the new capacity, BWE is running at around 65-70% of its total capacity, giving the company significant room for growth. Most of BWE’s new water plants are located in favorable industrial areas such as Tan Uyen and Bau Bang, the only remaining areas where industrial parks can be developed in Binh Duong province.
- Regarding the COVID-19 situation, impacts on BWE have been insignificant so far. The negatively impacted demand from industrial sectors is compensated by a stronger demand from residential customers. We project net profit to grow strongly by 38.3% y/y to VND745bn in 2021 and by 8.5% y/y to reach VND808bn in 2022. Compared to our last projection, 2021’s net profit is 14.5% higher thanks to less depreciation (a major new factory which started in Q2/2021 will only depreciate from Q3/2021) while 2022’s net profit is similar.
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