SHP Annual General Meeting
SHP’s 2024 Annual General Meeting was held on the morning of April 25th at the 272 Conference Center. Photo: Tu Kinh
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Numerous hydropower project investors are seeking project transfers.
On the morning of April 25th, Southern Hydropower Joint Stock Company (HOSE: SHP) held its 2024 Annual General Meeting. At the meeting, in response to questions about the possibility of further investment in hydropower plants in the coming years, Board Member Nguyen Van Thinh stated that the government’s investment plans have already been established, and the potential for hydroelectric power development will largely be in the northern region.
According to Mr. Thinh, if we were to ask whether SHP intends to invest in hydropower again, we must acknowledge that hydropower investment is a complex undertaking. The most likely scenario is mergers and acquisitions (M&A), as many project owners are now seeking to transfer their projects.
SHP has also been exploring options, but most operational plants or those in the investment phase prior to operation have encountered issues. Currently, numerous hydropower plants are up for sale, but the majority of negotiations will not result in successful transactions.
Management believes that the investment cost per MW of hydropower has increased compared to the previous period. This is due to rising costs across the board, including higher compensation for land acquisition. Most remaining hydropower projects will be located in remote areas with more challenging conditions than previous plants.
“With the financial strength of SHP, we could still arrange financing to invest in an additional few dozen MW if the opportunity arises,” said Mr. Thinh.
Regarding the proposal to amend the charter to open up “room” for foreign investors, according to SHP management, the proposal was received and a request for amendment was submitted last year, but it has not yet been approved by major shareholders.
First-quarter net loss of VND 6 billion
At the end of Q1/2024, the hydropower company reported a net loss of VND 6.2 billion, compared to a net profit of VND 15.3 billion in the same period last year. The decline was primarily driven by a 32% drop in revenue to VND 57 billion, while the cost of goods sold remained flat.
Similar to previous years, the first quarter’s financial performance is typically subdued as this period coincides with the dry season. Additionally, SHP carried out major repairs on its generating units. Depreciation of fixed assets, which accounts for the majority of costs, did not decline during the period.
SHP anticipates a challenging 2024 due to unfavorable hydrological conditions. The National Center for Hydro-Meteorological Forecasting predicts that the El Nino phenomenon will persist until the end of May 2024, which will affect the production of the company’s three plants. Equipment systems have also encountered defects that require repairs, renovations, and replacements.
Consequently, SHP has set a revenue target of VND 623 billion from electricity generation, a decrease of 5.6% compared to last year. Total electricity production is expected to reach 625 million kWh, a 3% reduction.
Of the total revenue, the Da M’Bri plant is projected to contribute more than half, with VND 394 billion and 369 million kWh, representing approximately 110% of design capacity and the average production level from 2014 to 2023 (excluding 2020). The Da Dang 2 and Da Siat plants are expected to contribute VND 148 billion and VND 81 billion to total revenue, respectively.
Profit after tax is estimated to reach VND 279 billion, an increase of more than VND 4 billion compared to 2023. SHP plans to distribute a cash dividend of 25% of par value.
In addition to several major repairs to the Da Siat and Da Dang 2 units that were completed earlier this year, the Company intends to continue major repairs to Unit H2 of the Da M’Bri plant as scheduled.
Furthermore, SHP will temporarily suspend the project to address sedimentation in the Da M’Bri hydroelectric power plant’s water intake area, as this project requires approval through the procedures outlined for a new investment project.
SHP introduces new Board of Directors members at the meeting. Photo: Tu Kinh
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Election of three new Board Members
After two years, Chairman of the Board of Directors Doan Duc Hung has requested to resign from the Board of Directors for the term 2022 – 2027, effective upon the conclusion of this year’s general meeting, due to work requirements from major shareholder, the Southern Power Corporation (EVNSPC).
As a result, the general meeting elected three new members: Mr. Trac Thanh Dien, Mr. Vo Van Trai, and Mr. Trinh Phi Anh. Mr. Dien (born in 1981) and Mr. Trai (born in 1967) were nominated by EVNSPC. Mr. Dien is an electrical engineer who currently serves as Head of Inspection and Audit at EVNSPC. Mr. Trai is the General Director of SHP.
Mr. Anh (born in 1947) was nominated by REE Energy Joint Stock Company (which owns 11% of SHP) and Dak R’Tih Hydropower Joint Stock Company (which owns 10%). Mr. Anh is currently a senior advisor at SHP.
Recently, the Board of Directors also decided to dismiss Mr. Truong Thanh Binh from his position as Deputy General Director, effective April 29th, 2024. Mr. Binh joined SHP in 2008 but recently submitted his resignation due to personal plans.
