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Solar power plant at Vinh Tan Power Center. Photo: PECC2

It is expected that on June 25, the Hanoi Stock Exchange (HNX) will auction shares of Electricity Construction Consulting Joint Stock Company 3 (TV3). Vietnam Electricity (EVN) is currently the largest shareholder of this company, owning more than 4 million shares of TV3, 48.78% of charter capital. The starting price is 76,700 dong per share, much higher than the current TV3 market price (40,000 dong per share). In 2019, TV3 set a revenue target of 390 billion dong, after tax profit of 16 billion dong.

Speed up divestment

On July 2, HNX expects to auction shares of Electricity Construction Consultant Joint Stock Company 4 (TV4). Accordingly, EVN will auction more than 11.3 million shares of TV4, equivalent to 71.6% of the charter capital of TV4. The starting price by EVN is 59,400 VND per share, corresponding to the expected amount of 671 billion VND. TV4's business activities have been quite stable over the years with a profit of about 20-25 billion VND per year. In 2019, TV4 set a target of 235.5 billion in revenue and 25.1 billion in after-tax profit. On the stock market, TV4 has a good price increase chain, from about 17,000 dong per share in early May, to 26,300 dong per share (May 31), and is currently at 30,000 dong per share. However, this price is still much lower than the starting price EVN wants to divest.

The divestment of EVN has taken place in the past few years, with progress accelerating in 2019. According to EVN's restructuring plan, 2017-2020, EVN has to divest all capital in six JSCs: Thu Duc Electrical Engineering, Electricity Finance, Dong Anh Electrical Equipment Corporation, Thuan Binh Electricity Wind, Electricity Construction Consultant 3, Electricity Construction Consultant 4. Of which, EVN has completed divestment at Thu Duc Electrical Engineering JSC. For the five remaining JSCs, EVN is promoting the prescribed procedures to continue divesting in 2019-2020.

Continuing equitization

With divestment, EVN continues to equitise some of its subsidiaries. Specifically, EVN has completed transferring Electricity Generation Corporation 3 (EVNGENCO 3) to JSC from October 1, 2018. After that, EVNGENCO 3's shares were traded on UpCom with PGV. Currently, EVN is promoting procedures to equitise Electricity Generation Corporation 1(EVNGENCO 1), Electricity Generation Corporation 2 (EVNGENCO 2).

These are the main electricity generation companies, holding many large electricity plants in the country such as: Phu My Thermal Power, Vinh Tan Thermal Power, Mong Duong Thermal Power, Buon Kop Hydropower (EVNGENCO 3); Thermal Power Plant Nghi Son 1, Duyen Hai Thermal Power Plant, Uong Bi Thermal Power Plant, Ban Ve Hydroelectric Power Plant, Dai Ninh Hydropower Plant, Dong Nai Hydropower Plant, Song Tranh Hydropower Plant (EVNGENCO 1); Can Tho, Quang Tri Hydropower, Song Bung Hydropower, An Khe-Kanak Hydropower (EVNGENCO 2);

With several power plant projects in the Power Plan VII adjusted and some behind schedule, it is forecasted that the electricity shortage in the next 2-3 years will be very high, leading to electricity generation from power plants of the Generator Corporations are very large, showing the potential value of shares of these Corporations.

Expect stocks of electricity industry

On June 6, TV2 shares (Electricity Construction Consultant Joint Stock Company 2) officially traded on HoSE, after cancelling listing on HNX from May 28. Reference price in the first trading day is 157,000 VND per share. Previously, closing the last trading session on May 27 at HNX, TV2 had a market price of VND 160,000 per share, higher than the starting price on HoSE. TV2 is a newcomer on HoSE, which is expected to attract the attention of more investors, after nearly 10 years of trading on HNX.

Not only EVN's "original" electricity stocks, but also the petroleum "original" stocks have very good transaction signs. For example, POW (Petro Vietnam Power Corporation), has been recently published by Forbes Magazine, entered the "List of the 50 Best Listed Companies" in 2019. List is ranked by Forbes Vietnam by selecting the companies with the best business results, and is listed on HoSE and HNX. Although POW has just appeared on the stock market, it has achieved great successes. Recently, on May 14, 2019, MSCI also put the POW into the MSCI Frontier Markets Index basket. Besides, NT2 (Nhon Trach 2 Petroleum Power Joint Stock Company) has always interested many investors.

With a series of stocks in the electricity industry on the market, first of all, investors have more choices and considerations in their investment strategy. The public opinion is often irritable "electricity prices only increase, not decrease", which is an image that investors can keep their mind on when investing in the long term.

On the side of electric enterprises, after equitisation and listing on the stock floor, it is opening a channel of capital mobilisation, thereby having more resources to serve the business and production plans and investment strategies of enterprises.

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In the first half of 2019, due to the influence of the movements of the world stock market, as well as the escalation of US-China trade tension, the domestic stock market also wobbled. However, although the trade war was an issue, it was difficult to predict the prices of important raw material and fuel sources such as oil, gas, coal and rubber, directly affecting the trading trend of stocks of related sectors, in the second half of 2019, the stock market is still expected by investors. Because listing business results of companies in the first half of the year is approaching, positive result will pull the cash flow back after a long period of stabilising or temporarily withdrawing. In addition, enterprises began to accelerate, to prepare for the end of the year. The presence of "stocks" named electricity will make the market liquidity less gloomy and there are attractive waves attracting cash flow into the market.