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Will SD5 build " their own kingdom" in Laos?

Wednesday, 22/08/2018 14:08

(BizLIVE) While SD 6 and SD 9 have been relocating their business to traffic infrastructure, SDT with the specialty of tunnel excavation for hydro power projects and traffic construction, SD 5 has a new path of taking part in hydropower market in Laos, a land of many “opportunities” for development.

In 2014, Song Da 5 Joint Stock Company (SD5 code) failed to achieve their business targets that were set out in the beginning of the year.

Particularly, although the revenue reached VND 2,021 billion, exceeding 40% of the target of VND1,443 billion, the profit after tax of the company only gained VND54.1 billion, fulfilling 90 % of the requested plan.

To explain the reason for the failure of plan, the management board of SD 5 said that in 2014, domestic jobs were narrowed and the construction projects of the company were completed simultaneously, the employment pressure for laborer increased; the company has met difficulties in the final settlement of projects that has been affecting the production and business performance of the unit. This is probably one of the main reasons for the decision of SD5 "bring the bell to the other land." Therefore, Laos seems to be a promising land for a hydropower enterprise like SD5. The country has abundant water resources, suitable geology for hydropower development. In addition, the Laotian government is taking priority over hydropower development to boost national energy and supply electricity to neighboring countries.

At present, there are nearly 3,000 MW of hydroelectricity capacity operated, adapting 98% of the demand in Laos and around 3,000 MW of capacity from hydropower plants that are being built.

Recently, SD5 has just won the bid of a large project that is Nam Ngiep 1 hydropower plant with a value of USD 140 million, which is expected to bring higher net profit margin than the hydropower projects in Vietnam executed by Song Da 5. Along with Bac Me Hydropower Project, this project will contribute the main revenue of Song Da 5 in the next two years.

According to BVSC's estimation, the revenue and profit before tax of Song Da 5 in 2015 will be VND 2,085 billion and VND 73 billion, respectively increase 4% and 35% in comparison with the year of 2014. Therefore, Song Da 5 can achieve the revenue of VND1,905 billion and profit after tax of VND59 billion approved by the annual meeting of shareholders in 2015.