In 2018, GEC pioneered in putting into operation two Solar power plants in Vietnam having total capacity of 117 MWp with an expected electricity output about 163 million kWh/year guaranteed by EPC contractor. That contributed significantly to GEC's Revenue and Profit in Q1 2019. During the quarter, the Company stably operated 16 Hydropower and Solar power with total capacity of 168 MW including 50% Hydropower and 50% Solar power compared to the same period last year with 100% Hydropower.
Net revenue reached VND 174 billion, up 44% over the same period due to the full recognition of Revenue from 2 Solar power plants, of which the largest proportion came from electricity sales of VND 170 billion, increase sharply 62% over the same period, accounting for 98% and 2% came from service and construction. Revenue structure has a clear shift when 51% came from Solar power, 47% from Hydropower while the same period 87% from Hydropower. Reducing dependence on a single energy source in GEC's Sustainable Development strategy has initially achieved efficiency in the Q1 2019. While 8/10 listed Hydropower enterprises simultaneously reported a sharp decline in profits, even with losses because of El Nino, drought that lead the inefficient in generation, GEC has operated effectively.
In the Q1, Phong Dien and Krong Pa Solar power plants contributed more than 41 million kWh, accounting for 51% of total electricity output compared to nearly 40 million kWh produced by 14 Hydropower plants. Using high quality Solar panels imported from Japan, along with regular maintenance and being located in high radiation areas helped the two Solar power plants electricity output exceed the plan by 120% and 106%.
Gross profit reached VND 101 billion, up 49%; Gross profit margin increased by 4% to 58%. In which, Gross profit margin of Hydropower and Solar power accounting for 98% of revenue structure increased to 50 % and 66%. With the advantage that most of the electricity production is committed to purchase by EVN, in the first quarter, there is no selling expense. Administrative expenses increased by 18% over the same period because GEC actively recruited more employees to deploy and put into operation 5 projects in 2019. Q1 consolidated profit before tax still increased by 14% to VND 59 billion and reached 25% annual plan of VND 240 billion. Profit after tax reached VND 56 billion, up 17% over the same period and Net profit margin reached 32%. It can be recognized that in 4 years, GEC's Gross and Net profit margin has remained stable at an attractive rate, above 50% and 30% respectively. Q1 2019, compared to the industry average of only 48% and 29%, GEC has shown better profitability indicators of 58% and 32%.
In the first quarter, GEC's Total assets increased by nearly 23% to VND 5.342 billion which mainly came from the construction in progress of Duc Hue 1 - Long An and Ham Phu 2 - Binh Thuan Solar power project. In April, GEC successfully generated electricity surpassing schedules of this 2 plants, signed a PPA contract pricing of 9.35 cents/kWh and is expected to operate commercially before June 30th, 2019. Thus, the total capacity of GEC's Solar power has reached 215 MWp, increasing market share of GEC in Vietnam to 22%. In addition, the successful upgrade of Dak Pi Hao 2 Hydropower plant to 10 MW brought the total capacity of the Company's to 248 MW, of which Solar power is 163 MW, accounting for 66% and Hydropower is 85 MW, accounting for 34%. With approval to purchase shares from the developer of Duc Hue 1 Solar power plant to increase ownership to 100%, it will directly improve the revenue and profit of the parent company as well as benefit of GEC’s Shareholders.
With the loan to finance the above two Solar projects, Debt/Equity ratio increased to 0.88 times compared to 0.63 times at the end of 2018, however it is slightly lower than industry's level. Thanks to the increase in reciprocal assets, Debt/Total assets ratio only increased slightly to 0.42 times compared to the industry average of 0.38 times. This is entirely consistent with the development roadmap when GEC consecutively put into operation projects in its portfolio.
GEG was one of the stocks that had positive trading on Upcom when continuously in the first weeks of March and April, GEG was in the Top 10 and Top 3 of stocks which was net bought by foreign investors. The average trading volume in the first 4 months of 2019 reached nearly 500 thousand shares, equivalent to closely VND 10 billion, up 106% compared to the whole year 2018. On May 3rd, 2019, at the average trading price of VND 23,400/share, GEG's market price has increased by 53% compared to the end of last year.
One of the positive information for Upcom listed companies is that the Hanoi Stock Exchange proposed to allow margin lending for large scale company in Upcom which qualify margin lending criteria. Currently, margin lending only applies for HSX and HNX listed stock. If this petition is approved, it will increase liquidity for Upcom, especially for large capitalization stocks, nearly 200 million USD and having great attention from foreign investors like GEG.
For contact information:
Mr. Nguyen Anh Vu