A boost for thermal power

According to the National Center for Hydro-Meteorological Forecasting, there is a 96% probability that El Niño will maintain very strong intensity from November 2026 to January 2027. The phenomenon is then expected to weaken but will likely remain moderate to strong through the first half of summer 2027.

Notably, the Ministry of Agriculture and Environment's report on the projected impacts of the 2026-2027 El Niño event outlines a “very high risk” scenario, with rainfall across Vietnam potentially falling 20-40% below average, and by more than 50% in some areas of the south central coast.

Meanwhile, water flows across many river basins could decline by 20-40%, putting numerous reservoirs at risk of failing to accumulate sufficient water. The 2027 rainy season could also arrive late, prolonging drought and water shortages through mid-year.

For the power sector, these developments could alter the generation mix. As hydropower supply capacity declines due to water shortages, coal- and gas-fired power plants could see increased dispatch opportunities, helping offset the shortfall in electricity output and maintain energy security.

The growing role of thermal power is already reflected in the electricity generation mix. According to Vietnam Electricity (EVN), total electricity production and imports across the system reached 297.4 billion kWh in the first 10 months of 2026, up 9.8% year-on-year.

Coal-fired power made up 147.78 billion kWh, or 49.7% of the total, while hydropower contributed 73.39 billion kWh, equivalent to 24.7%. Gas turbine power generation reached 23.28 billion kWh, accounting for 7.8%.

The shift was also highlighted in a September report by MB Securities (MBS). Coal-fired power generation dispatched in the third quarter rose 13% year-on-year, despite a high comparison base in the same period last year. Coal-fired plants were operated at maximum capacity to compensate for the hydropower shortfall.

Gas-fired power generation increased by around 37%, with significant contributions from the newly operational Nhon Trach 3 and 4 plants.

MBS forecasts that several plants operated by Petrovietnam Power Corporation (PV Power, HoSE: POW) and Petrovietnam Power Nhon Trach 2 JSC (HoSE: NT2) will continue to receive high contracted output allocations (Qc), supporting their profit outlook despite a sharp increase in gas prices driven by global geopolitical conflicts.

Thermal power companies report strong profits

Business results for the first nine months of 2026 show significant growth at several thermal power companies. Among them, PV Power stands out thanks to its large installed capacity and diversified portfolio of coal- and gas-fired power plants.

In the third quarter, the firm posted consolidated net revenue of more than VND16.77 trillion ($657.42 million), up more than 2.1 times year-on-year. After expenses, its net profit reached over VND2.07 trillion ($81.26 million), compared with more than VND948.3 billion in the same period last year.

For the first nine months, it recorded net revenue of more than VND49.40 trillion ($1.94 billion), up 94.5%, while after-tax profit exceeded VND6.9 billion ($270,434), more than 3.1 times the year-earlier figure and well above its full-year profit target.

The company's operating momentum was reflected in its electricity output. PV Power generated a total of 19,329 million kWh during the nine-month period, equivalent to 121% of its plan and 144% of the output recorded in the same period of 2025.

Vung Ang 1 Power Plant in the central province of Ha Tinh contributed 5,739 million kWh, while the Ca Mau 1 and 2 plants in the southernmost province of Ca Mau generated 4,256 million kWh. Nhon Trach 2 contributed 3,302 million kWh, and the Nhon Trach 3 and 4 complex delivered 3,884 million kWh.

In the gas-fired power segment, NT2 also reported positive results, with Q3 revenue and after-tax profit reaching more than VND2.81 trillion ($109.98 million) and VND418.6 billion ($16.4 million), respectively, up 45.5% and 95.4% year-on-year.

According to the company's explanation, gross profit from electricity generation increased by VND285.2 billion ($11.17 million), or 139.4%, in Q3. Electricity generation revenue rose by VND878.9 billion, while cost of goods sold increased by VND593.7 billion. As revenue grew faster than costs, gross profit improved significantly. Financial income also rose by VND32.6 billion from the same period last year.

For the first nine months, NT2 posted net revenue of more than VND7.8 trillion ($305.73 million), up 43.5%, and after-tax profit of over VND906.3 billion ($35.51 million), an increase of nearly 57%. Its profit had already exceeded the full-year target after just three quarters.

Among coal-fired power producers, Power Generation Joint Stock Corporation 3 (EVNGENCO3, HoSE: PGV) reported total electricity output of 22.105 billion kWh in the first nine months, up 11.5% year-on-year and equivalent to 72.09% of its full-year target of 30.662 billion kWh.

According to its newly released Q3/2026 financial statements, its Q3 net revenue reached VND11.96 trillion ($468.92 million), up 43.3% year-on-year. For the first nine months, net revenue totalled VND37.29 trillion ($1.46 billion), up 20.7%, while after-tax profit reached VND3.39 trillion ($133.06 million), 2.96 times the figure recorded in the same period last year.

Similarly, Quang Ninh Thermal Power JSC (UPCoM: QTP) reported Q3 net revenue of more than VND2.81 trillion ($110.34 million), up 36.8% year-on-year, while after-tax profit exceeded VND75.6 billion ($2.96 million), an increase of 129.3%.

The results were mainly driven by higher commercial electricity output, which boosted electricity sales revenue, while the increase in cost of goods sold was slower. Financial revenue also rose on higher deposit interest income, while financial expenses declined as the company incurred no borrowing costs during the quarter.

For the first nine months, QTP recorded net revenue of more than VND9.17 trillion ($359.7 million), up 17% year-on-year, and after-tax profit of over VND599.5 billion ($23.51 million), up 51.3% and well above its full-year 2026 profit target.

At Hai Phong Thermal Power JSC (UPCoM: HND), Q3 net revenue reached more than VND2.78 trillion ($109.05 million), up 36.3% year-on-year, while after-tax profit came to nearly VND35.5 billion ($1.39 million), compared with a loss of more than VND15 billion in the same period last year.

The company said electricity generation revenue in Q3 increased by more than VND741 billion ($29.03 million), mainly due to a 267.7 million kWh rise in commercial electricity output and an increase in the electricity payment contract price (Pc). Deposit interest and other income also contributed to the results.

After nine months, HND posted net revenue of more than VND8.86 trillion ($347.5 million), up 15.5% from the same period last year, and after-tax profit of over VND543.7 billion ($21.32 million), up 38.4% and exceeding its full-year target.

Another company reporting improved results was Pha Lai Thermal Power JSC (HoSE: PPC). Its Q3 net revenue reached over VND1.88 trillion ($73.8 million), up 25.7% year-on-year, while after-tax profit stood at over VND4.1 billion ($160,772), compared with a loss of more than VND14.2 billion in the same period last year.

In the first nine months of 2026, its net revenue reached nearly VND6.54 billion ($256.42 million), up 31.4% year-on-year, while after-tax profit totalled over VND170.1 billion ($6.67 million), nearly 3.9 times the year-earlier figure. The company had achieved about 81% and nearly 46% of its respective annual revenue and pre-tax profit targets.

Shares face correction pressure despite strong profit growth

In contrast to the improving business performance, shares of thermal power companies have remained relatively subdued on the stock market, with several stocks recording double-digit declines in recent months.

According to TradingView data, all six stocks - POW, PGV, NT2, QTP, HND and PPC - declined over the past six months.

HND posted the steepest drop, at 20.75%, followed by QTP, 14.63%; PPC, 12.31%; and POW, 11.47%. NT2 and PGV fell 9.39% and 8.04%, respectively.

Over the three-month period, share price movements were more mixed. NT2 was the only stock to gain, rising 4.72%, while PPC edged down 1.59%. The remaining stocks continued to face correction pressure, with HND falling 11.58%, POW 9.85%, QTP 7.08% and PGV 4.86%.

The divergence between business performance and share prices indicates that short-term profit growth has yet to provide sufficient momentum for a broad-based rally in thermal power stocks. Beyond reported earnings, the market is also factoring in expectations for profit sustainability, electricity dispatch prospects, fuel cost fluctuations and individual company valuations.

Although securities firms have outlined a positive outlook for the thermal power sector, the potential impact varies among companies.

MBS expects POW, NT2 and QTP to lead profit growth in the power sector in 2026, forecasting profit growth of around 10% for companies in its coverage universe.

Among these, POW has the most positive outlook, supported by higher-than-expected contracted output at Nhon Trach 3 and 4, lower depreciation expenses and an increase in average electricity selling prices.

Another broker Vietcap, however, said NT2 faces the risk of declining profits due to a lower-than-expected gap between electricity selling prices and rising labor costs. QTP could be affected by a fourth-quarter plant shutdown to upgrade its flue gas treatment system, while PPC faces the risk of profits falling below forecasts due to its conservative business plan and weaker-than-expected first-quarter results.