GEG Q1 Net Profit Plunges 57% but Core Earnings Rise 16%; ACBS Maintains Buy with 27% Upside

Overview

Gia Lai Electricity JSC (GEG) reported a 57% year-on-year decline in Q1/2026 net profit to 264 billion VND, but core earnings actually rose 16% after stripping out a one-off gain in the prior-year period. Despite the headline drop, ACBS Securities maintains a Buy rating with a target price of 18,400 VND, implying a 27% upside from the current share price of 14,300 VND.

Key Facts

• Q1/2026 net profit: 264 billion VND, down 57% YoY.
• Q1/2026 revenue: 767 billion VND, down 31% YoY.
• Core profit (excluding one-off gain from Tan Phu Dong 1 project in Q1/2025) rose 16% YoY.
• Total commercial electricity output reached 362 million kWh, up 10% YoY.
• Hydropower output surged 59% to 51 million kWh; solar output rose 11% to 102 million kWh; wind output edged up 2% to 209 million kWh.
• Average selling price fell 4% to 2,119 VND/kWh; gross margin narrowed from 74% to 64%.
• ACBS maintains a 2026 net profit forecast of 441 billion VND and a target price of 18,400 VND per share.

What Happened

Gia Lai Electricity (GEG) released its Q1/2026 financial results, showing a sharp drop in net profit to 264 billion VND from 614 billion VND in Q1/2025. The decline was largely due to a high base effect: in Q1/2025, the company recorded a one-off gain of nearly 400 billion VND from the Tan Phu Dong 1 project. Excluding that item, core profit increased by approximately 16% year-on-year.

Revenue fell 31% to 767 billion VND, despite a 10% increase in total electricity output to 362 million kWh. The revenue decline was driven by a 4% drop in the average selling price to 2,119 VND/kWh and a sharp 47% plunge in wind power revenue to 440 billion VND. Solar power revenue rose 12% to 236 billion VND, while hydropower revenue was flat at 89 billion VND. The company’s gross margin contracted from 74% to 64%.

Market Context

GEG shares closed at 14,300 VND on May 8, down 1.38% on the day, with trading volume of 480,000 shares. The stock is trading near its year-to-date low, giving the company a market capitalization of approximately 5,123 billion VND. GEG is listed on HOSE and operates in the renewable energy sector, which has faced headwinds from declining power purchase prices and regulatory uncertainty. The broader VN-Index has been volatile, but GEG’s valuation at current levels reflects the market’s concern over the headline profit decline.

Strategic Significance

The Q1 results highlight the importance of distinguishing between one-off items and underlying operational performance. GEG’s core profit growth of 16% demonstrates that its renewable energy assets are generating higher output, particularly from hydropower and solar. The upcoming commercial operation date (COD) of the Duc Hue 2 solar project under a direct power purchase agreement (DPPA) in Q2/2026 could provide a new revenue stream, though the selling price is still under negotiation. ACBS’s maintained target price suggests that the market may be overreacting to the headline profit drop, and the stock could offer value if core earnings continue to grow.

What to Watch

• COD of Duc Hue 2 solar project and the final DPPA price agreed with the off-taker.
• Q2/2026 earnings release to confirm whether core profit growth is sustained.
• Any updates on the average selling price trend and gross margin recovery.
• Progress on the 5% stock dividend plan for 2026.
• Foreign ownership changes and institutional interest in GEG shares.