The Power Grid Upgrade: A $15 Billion Investment with Massive Benefits for Businesses

Nearly $15 Billion Invested in Power Transmission Grids

According to the Master Plan for National Power Development for the 2021-2030 period, with a vision towards 2050 (Power Development Plan VIII), approved by the Prime Minister, the electricity sector is a critical infrastructure industry. Power development must take the lead in promoting rapid and sustainable development. The total investment in power sources and transmission grids for the 2021-2030 period in Power Development Plan VIII is approximately $134.7 billion, with the power transmission sector accounting for $14.9 billion. Notably, the electricity sector requires approximately $77.6 billion in investment for the 2026-2030 period, of which $5.9 billion is earmarked for transmission grids.

Regarding the power grid, the Power Development Plan focuses on investing in 500kV power lines, 500kV substations, and 220kV power lines and substations.

The National Power Transmission Corporation (EVNNPT) aims to commence construction on 34 projects and complete and commission 74 projects by 2025. The estimated total investment in construction is VND 20,670 billion, including approximately VND 14,746 billion in pure investment.

The acceleration of investment in power transmission grids, coupled with the recent amendments to the Electricity Law, will provide a boost to businesses operating in the power infrastructure and grid sectors, especially with the decentralization of investment decision-making authority to the provincial People’s Committees for grid projects and the privatization of transmission lines from 220kV and below.

According to Shinhan Securities, the plan to double the length of power lines and the number of substations by 2030 translates into a compound annual growth rate (CAGR) of 11%/year for the construction of transmission lines and 13%/year for substations. As a result, businesses operating in this field are expected to benefit.

Optimistic Outlook for GEX-affiliated Companies

As the leading electrical equipment company, GELEX Group Joint Stock Company (code: GEX), through its subsidiary GELEX Electric, owns eight subsidiary companies that manufacture and supply a comprehensive range of products within the electricity industry value chain, spanning transmission, distribution, and domestic applications. Many of these brands have a long and respected history and hold significant market share in Vietnam, including CADIVI electrical cables, THIBIDI transformers, and EMIC electrical measurement devices…

Assessments by securities companies indicate that as investment in power transmission grids intensifies and numerous projects are initiated, GELEX’s electrical equipment companies stand to benefit significantly, particularly since the Vietnam Electricity Group (EVN) is currently the largest customer for two strategic product lines: electrical cables and transformers.

THIBIDI transformers maintain a significant market share.

A report by SSI Securities Company reveals that, in the long term, according to Power Development Plan VIII, the total investment in power transmission grids is expected to increase significantly from an average of $1 billion/year in the 2011-2020 period to $1.5 billion/year in the 2020-2030 period and approximately $1.7-1.9 billion/year in the 2031-2050 period. EVN accounts for approximately 20% of GELEX Electric’s cable revenue and about 50% of its transformer revenue.

Additionally, the recovery of the real estate market and the growth of domestic electricity demand will provide a substantial boost to the revenue and profit growth of the company. By 2025, GELEX aims to achieve a record revenue of VND 37,600 billion, an increase of 11.5% compared to 2024. The electrical equipment segment is expected to contribute nearly 60% to the group’s revenue structure. GELEX Electric’s revenue target for 2025 is VND 22,282 billion, with a consolidated pre-tax profit of VND 1,686 billion.

Previously, in 2024, GELEX’s electrical equipment segment also achieved remarkable business results, with a consolidated pre-tax profit of VND 2,152 billion on a revenue of over VND 21,130 billion, representing increases of 27.2% and 112.6%, respectively, compared to 2023.

Notably, GELEX Electric is orienting its subsidiaries to produce electrical equipment with high intellectual value and environmental friendliness to serve smart grids. The company is also focusing on research and development collaborations to create new high-tech products, including fire-resistant cables, fire protection products, security, and surveillance equipment…

ABS Securities Company assesses that in 2025, GELEX Electric’s electrical equipment business will continue to grow positively. However, the energy segment may be impacted by the divestment from some projects. Regarding the long-term outlook, ABS states, “We assess GELEX Electric’s prospects as positive based on the government-approved plan for the development of the electrical equipment manufacturing industry for the 2015-2025 period. By 2025, the industry is expected to manufacture and supply a comprehensive range of electrical equipment for power line and substation projects, meet 50-60% of the domestic demand for 110-220KV transformers, and satisfy 60-70% of the domestic demand for various electrical meters, instruments, and systems for electricity monitoring and safety. The industry also aims to export 19-20% of its output, focusing on high-quality electrical cables with an annual export growth rate of 35.5%.”

The robust growth of renewable energy also necessitates increased investment in electrical infrastructure, specifically transformers and power cables, to prevent grid overload. The rising demand for electrical equipment from transportation projects to alleviate traffic congestion and the planned investments in the telecommunications sector will further boost the growth of wire and electrical equipment manufacturing.

According to ABS, GELEX’s energy segment will significantly benefit from Power Development Plan VIII and the ongoing refinement of the legal framework. The company’s debt is on a downward trajectory, which will help reduce financial expenses and improve profit margins.

GELEX Electric is regarded as a long-term prospect by multiple securities companies.

Additionally, some electricity construction companies, such as PC1 and TV2, listed on the stock exchange, are expected to benefit from the increased number of power grid projects in the coming period. In 2024, PC1’s revenue surged to VND 10,078 billion, while TV2’s revenue rose to VND 1,336 billion.