On June 14th, 2019, Gia Lai Electricity Joint Stock Company (Company, GEC) officially put into operation Solar power plant Truc Son, with capacity of 44.4 MWp. The project was implemented on 50 ha area in Dak Nong province within only 3 months with total investment of VND 843 billion. This is GEC's 5th in-operation Solar power plant and the 3rd plant in the first half of 2019 after Duc Hue 1 - Long An (49 MWp) and Ham Phu 2 - Binh Thuan (49 MWp), increasing total capacity to 260 MWp with total investment of nearly VND 5,000 billion. Expected annual production of each Solar power plant is from 60 to 103 million kWh with estimated revenue from VND 128 to 220 billion. Most of GEC's in-operation projects are the first projects in the locality with relatively good solar radiation rate of 4.6-5.3 kWh/m2/day and sunshine hours of 1,700-2,544 hours/year. It is estimated that the market shares of Solar power plant of GEC in 5 these provinces are 100% in Hue, 80% in Gia Lai, 50% in Long An, 40% in Dak Nong and 20% in Binh Thuan respectively. According to EVN, by the end of May 2019, there were 47 projects with a total capacity of 2,300 MWp are in operation.
With the experience of the pioneer in the Solar power market, GEC has experimented the role of EPC contractor for the Truc Son project, which is the foundation for the next projects, in order to reduce costs in the context of electricity not be entitled to a preferential rate of 9.35 cents/kWh after June 30th, 2019. It is estimated that GEC could reduce VND 100 billion for each project to ensure the profit is not affected when the FiT changes. The FiT of Solar power after June 30th, 2019 has not been determined yet. According to the information on the draft policy which is collected opinion of relevant parties, whether the FiT is divided into 2 regions or 4 regions, the new price will no longer be as attractive as now, expected from 6.67 to 9.2 cents/kWh. In addition, with the advice of Indian experts, GEC has built a completed O&M team and model, ensuring plant to operate efficiently, coordinating technical matter and planning repair schedules, focusing on monitoring SCADA system for data analysis and warning. GEC will provide O&M services to the market in 2019 to diversify revenue.
The prolonged hot weather in the first months of 2019 negatively affected the production of Hydropower plants. According to EVN's forecast, these plants will not accumulate enough water in 2019, along with reduced gas and electricity output, making the possibility of power shortage in the dry season 2019 is high and prolonged. However, Solar power plants will be beneficial when Binh Thuan, Dak Nong, Gia Lai, and Long An, where GEC is operating, are the highest radiation areas in Vietnam. Solar power projects generate stable revenues in 20 years, so this is considered a suitable step for the Company in the strategy of diversifying energy types in accordance with the weather conditions.
In the 2018 Annual Report, GEC has revealed its M&A strategy through searching for potential Renewable Energy projects. Specifically, Solar power projects with investment of VND 16-18 billion/MWp, Hydropower projects VND 30 billion/MW, Wind power not over VND 35 billion/MW for onshore and VND 45 billion/MW for offshore projects. GEC also seeks opportunity to invest in Laos' Hydropower projects ahead of the policy of importing electricity from southern Laos through existing 220 KV lines with a capacity of up to 1,000 MW; Wind power projects in potential areas in Southwest and Central Highlands and Solar power plant in areas with preferential FiT. Orientation to 2025, GEC will complete the value chain of the energy industry with a diversified investment portfolio from Hydropower, Solar power, Wind power and Waste-to-energy power, which are new forms, not easy to deploy in Vietnam due to technical matter, experiences and finance.
Although only traded on the Upcom, GEC is still striving towards the best practices in the market with the commitment of companion from 2 prestigious international shareholders: IFC and Armstrong owning about 35% ownership; through the application of the United Nations 17 Sustainable Development Goals, GRI international standards; ASEAN Scorecard; OECD Corporate Governance Rules; ready for listing on HOSE in 2019.
Continuing to promote investor relations and capital market activities, GEC has continuously participated in annual events connecting finance communities such as Vietnam Access Day 2019 - VCSC, C-Suite - SSI and Citibank, Emerging Vietnam - HSC. GEC is the only invited company in the clean energy sector and received great attention from funds around the world such as Amundi, Eastspring Investments, Phillip Capital, Must Asset Management ... GEG shares often appears in the list of top net buy of foreign investors on Upcom besides large stocks such as ACV, BSR, VEA, VGG, VTP.
In June, GEC also announced the successful issuance of VND 219 billion bond without warrants, non-guaranteed, no collateral for both institutional and individual investors. The issuance received positive feedback. Along with over VND 106 billion from the issuance of 9.7 million ESOP shares, GEC's chartered capital has increased to VND 2,039 billion, which is the foundation for capital mobilization activities to develop more Solar power and Wind power projects. GEC has just completed a 7% cash dividend payment in June. After technical adjustment, the GEG share price closed on June 26th, 2019 at VND 23,000, 58% increase compared to the beginning of the year.
For further information, please contact:
Mr. Nguyen Anh Vu
Investor Relations Department