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Energy stocks remain a popular pick
Energy stocks are attracting investors who don’t expect the companies’ growth prospects to be affected by challenging economic conditions.
Vietnam’s current demand for power far exceeds supply and state-owned monopoly power supplier Electricity of Vietnam, known as EVN, expects demand will increase by around 15 – 17 percent a year.
EVN also said its power output would be able to “nearly meet the country’s demand” if the construction of several new power plants are completed in 2010 as scheduled.
Vietnam plans to buy 3.5 billion kilowatt hours (kWh) from China, up 31 percent from last year, to meet the shortfall in supply, EVN said in April.
EVN, which also controls all distribution and transmission grids, will pay about US$160 million, or 4.5 cents per kWh, for the imported power, which will be resold to retail users at between 5.6 cents and 11 cents per kWh, EVN Deputy General Director Nguyen Manh Hung said in an online chat at EVN website www.tietkiemnangluong.com.vn.
The state-run group, which started buying electricity from China in 2004, last year imported 2.67 billion kWh of spare capacity from Chinese power plants in the border province of Yunnan.
At present, EVN buys power from private power suppliers and it also sells electricity at different prices to different companies.
The price enables the private suppliers to earn a net profit of at least 5 percent.
For EVN subsidiaries, the price is set so these enterprises can pay dividends.
Subsidiaries Thac Ba Hydropower, Vinh Son Hydropower and Pha Lai Thermal Power have a target of a 12 percent dividend while Thac Mo Hydropower and Ba Ria Thermal Power have a dividend target of 5 percent.
According to the National Power Development Plan, between 2006 and 2015 the government will set up a power-trading market and encourage domestic and foreign investors to participate in it.
Bao Viet Securities Company analysts said there will be a breakthrough in power suppliers’ business once the market was put into operation, making energy stocks even more attractive.
Oil stocks also popular
Many subsidiaries of Vietnam Oil and Gas Group (PetroVietnam), Southeast Asia’s third biggest fuel producer, are listed on the Ho Chi Minh Stock Exchange.
Domestic and foreign investors often buy these stocks heavily because the oil sector, which is a key driver of the country’s economy, has a perceived huge growth potential.
The first half results of petroleum firms this year showed their earnings proved resilient amid challenging economic conditions.
Drilling firm PV Drilling, or PetroVietnam Drilling and Well Services Joint Stock Company, reported first half earnings after interest and tax rose to VND504 billion (US$30.5 million), a year-onyear increase of 134 percent, while its net profit target this year was VND700 billion ($42.3 million).
Similarly, PetroVietnam Transportation Corporation, known as PV Trans Corp, announced an after-tax profit of VND23 billion ($1.4 million), equal to 58 percent of this year’s target.
Thanhnien
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