REE – Wind power to drive earnings recovery from 2027 – Update report

• REE is currently trading at a TTM P/E of 9.3x, below its five-year average of 12.8x, which we consider attractive given the company’s positive outlook.
• We lower our target price by 15%, mainly reflecting downward revisions to power segment cash flow forecasts amid the adverse impact of the El Niño cycle.
• We reiterate our ADD rating with a target price of VND56,600/share, implying 24.7% upside and a 1.9% dividend yield.

Financial Highlights

• 1H26 net profit (NP) rose 9.0% YoY, mainly driven by stronger M&E earnings on the back of project completion and provision reversals, alongside higher office leasing income from increased occupied space.
• We forecast 2H26 NP to decline 11.2% YoY, with growth in the M&E and office leasing businesses partially offsetting weaker power earnings. Looking ahead to 2027, we expect NP to increase 10.7% YoY, mainly supported by new wind power projects and revenue recognition from carried-forward M&E contracts.

Investment Thesis

New wind projects to drive power earnings recovery amid El Niño headwinds

We expect REE-attributable power NP to recover 18.4% YoY in 2027, mainly driven by new wind power projects in Tra Vinh. Tra Vinh V1-4 and V1-3 Phase 2 are expected to contribute for a full year, while V1-5 and V1-6 Phase 2 should begin contributing from 2Q27. These capacity additions are forecast to lift wind power NP by 92.1% YoY. Meanwhile, El Niño is expected to weigh on hydropower output through 2H26 and early 2027. Nevertheless, tighter hydropower supply should support competitive market electricity prices, partially offsetting the impact of unfavorable hydrological conditions.

Large carried-forward backlog and new contracts underpin M&E growth

We forecast M&E revenue to increase 39.0%/36.6% YoY in 2H26/2027, driven by accelerated construction and revenue recognition from accumulated contracts. New contract awards exceeded VND5.86tn (USD226mn) in 1H26, including major projects such as the An Khanh Data Center, Ngoc Trai Theater and developments in Phu Quoc. Accordingly, we forecast carried-forward backlog to reach nearly VND8.0tn (USD309mn) entering 2027, with ~89% of FY27 M&E construction revenue backed by contracts signed by end-2026.

Improving E.town 6 occupancy to support office leasing earnings

We forecast REE-attributable office leasing NP to increase 16.2%/5.0% YoY in 2026/27, driven by higher occupied space and lower financing costs. We expect E.town 6 to achieve average occupancy of 75%/85% in 2026-27, while existing buildings maintain approximately 95%, lifting portfolio-wide occupancy to 91%/93%. Meanwhile, declining outstanding debt at E.town should reduce office leasing interest expenses by 27.8%/29.2% in 2026/27, supporting margin expansion and stable earnings.

Attractive valuation given the company’s solid prospects

REE currently trades at a TTM P/E of 9.3x, below its five-year historical average of 12.8x. We believe this valuation provides room for upside as earnings contributions from new wind projects, M&E project execution and improving office occupancy become increasingly visible. Our ADD rating is underpinned by earnings growth from existing assets and projects already incorporated into our forecasts. Potential new power investments could offer additional upside once their investment returns become clearer.

Read the full report: Here