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Company Quarterly Earnings Update – BWE VN – Q4/2024
Summary of the Q4/2024 results and outlook of Binh Duong Water Environment JSC (BWE VN)
- Revenue increased by 12.3% y/y to VND3,959 bn. Water supply remained the primary contributor, growing 12.5% y/y and accounting for 66% of total revenue. In Binh Duong province, revenue rose 5.6% y/y to VND2,322 bn, supported by new residential customers and accelerated manufacturing activities. Meanwhile, revenue in Long An province more than doubled, contributing 11% of total water supply revenue. In contrast, the waste and wastewater treatment segments (17% of total revenue) declined 15.6% y/y due to delays in revenue recognition for wastewater treatment. Revenue from other segments surged 62.8% y/y to VND687 bn, largely driven by one-off revenue from trading materials and the expansion of the water pipeline construction segment.
- Net profit declined 4.8% y/y to VND642 bn, primarily due to lower profit margin in the waste treatment segment, which was impacted by rising costs. Additionally, large unrealized foreign exchange losses from revaluation of USD-denominated loans, driven by the stronger USD, further weighed on earnings.
- Financial leverage remained relatively high, with D/E and D/A ratios at 1.26x and 0.49x, respectively.
- Vietnam’s clean water supply market presents strong growth potential, driven by current low level of nationwide access and rising demand from rapid urbanization and industrialization. While urban water needs are primarily met through clean piped water, over half of the rural population lacks access to clean water. This underscores the urgent need for water infrastructure expansion, prompting government support through incentives such as stable water price increase adjustments. These policies enable water supply companies like BWE to invest in water processing facilities and transmission pipeline networks to keep pace with growing demand.
- For 2025, earnings growth will be driven by increased water supply capacity in Long An province from Q3/2025, alongside a 20% hike in residential waste treatment prices in Binh Duong province effective from H2/2025. Additionally, a slower VND depreciation against the USD is expected to reduce FX losses. In 2026, we project revenue and net profit growth will be supported by higher utilization of the new water plant in Long An province, a 3.0% increase in water prices, and the full-year effect of the new residential waste treatment prices in Binh Duong province. Gross profit margin is expected to improve with these price adjustments, while FX losses are not anticipated as the USD/VND exchange rate stabilizes from 2026 onward.
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Featured image credit: biwase.com.vn
