Summary of the 2021 results of Binh Duong Water Environment JSC (BWE VN)
2021 result highlights
- BWE’s net revenue advanced sightly by 3.0% y/y to reach VND3,116bn in 2021. Sales from its main business – clean water supply achieved a solid growth of 9.9% y/y, as the total clean water volume increased by 5.3% y/y amid the impact of the COVID-19 outbreak in H2/2021. BWE has aggressively expanded its water supply capacity over the last three years, increasing its capacity to 760,000 cubic meters per day (m3/day) by the end 2021 from 472,000 m3/day in 2019. The utilization capacity stood at 67% in 2021.
- The operating margin improved from 24.7% to 27.1% thanks to a higher sales contribution from the water supply segment which is the most profitable. SG&A expenses as a percentage of sales declined somewhat thanks to economies of scale. BWE achieved a net financial income versus net financial expenses mainly thanks to the reversion of provision expenses. All in all, net profit climbed by 38.0% y/y to reach VND743bn.
- We maintain our positive outlook for water demand in Binh Duong province thanks to rising demand from industrial clients and solid organic growth from residential customers. From 2022 onwards, we believe such trends will be strengthened as the pandemic is contained with a high vaccination rate in Vietnam. We expect the FDI inflow and infrastructure investment in Binh Duong to accelerate. That will in turn speed up the urbanization and economic activities in this province. With its new capacity, BWE is running at around 65-70% of its total capacity, giving the company significant room for growth. Its profitability will also improve following its rising capacity utilization.
- As for 2022, we expect the water selling volume to grow 11.1% y/y while its selling price will increase 5.6% y/y. Total sales are forecast to advance by 17.1% y/y to VND3,647bn while net profit growth will be somewhat lower at 7.5% y/y due to lack of one-off income, reaching to VND799bn. As for 2023, we expect sales will increase by 8.8% y/y to VND3,968bn while net profit will increase by 24.3% y/y to VND993bn.
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