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Binh Duong Water (BWE VN) – Q1 2025 – Revenue Growth Amid Margin Pressure
Summary of the Q1 2025 results and outlook of Binh Duong Water Environment JSC (BWE VN)
- Binh Duong Water’s revenue rose 16.7% y/y to VND924bn, driven by strong growth in wastewater treatment (from partial FY2024 revenue recognition) and the “others” segment (from mostly construction activities). The core water supply segment (69.9% of total revenue) grew modestly by 3.0%. In Binh Duong, revenue rose 2.3% y/y, trailing volume growth (+5.9% y/y) due to a 3.4% y/y drop in average selling price (ASP). However, on a quarterly basis, Q1’s ASP showed signs of recovery, indicating a potential bottom since Q4/2024. Despite higher revenue, net profit declined 17.6% y/y to VND148bn, weighed down by lower margins, higher labor and depreciation costs, and increased FX losses.
- In March, TDM, BWE’s largest shareholder and water supplier, unexpectedly cut its price to BWE by 21%, a discount expected to last through 2025. This move supports BWE’s profitability amid delays in price hike approvals, though no clear end date is given
- Financial leverage remains high with D/E at 1.42x and D/A at 0.50x, but liquidity risk is low, supported by a 3.3x interest coverage and 1.2x current ratio. Additionally, since Q4/2024, BWE began to mitigate its USD volatility risk through a series of Cross-Currency Swap (CCS) contracts. By Q1, BWE has hedged both FX and interest rates on ~80% of its current USD-denominated debt.
- Vietnam’s clean water supply market continues to see long-term growth, bolstered by low nationwide access and increasing demand from rapid urbanization and industrialization. While the recently approved provincial merger may temporarily slow down water price increase approvals, government backing is expected to remain robust.
- U.S. “reciprocal” tariffs are expected to have minimal impact on Vietnam’s water industry, as the recent de-escalation between the US and China suggests a lower tariff rate for Vietnam than the 46% previously announced. Meanwhile, resilient residential demand, fueled by ongoing urbanization, continues to support the industry’s growth.
- In the last 9M/2025, BWE’s revenue is expected to be supported by new capacity in Long An and rising demand in Binh Duong and Binh Phuoc, while Binh Duong’s y/y ASP increase is due to its holding at Q1 levels. Gross margin is forecasted to be boosted by volume growth, favorable pricing, and TDM’s discounted selling price throughout 2025. Net financial expenses are set to decrease y/y, aided by higher dividend income and reduced FX losses.
Interested in BWE? Click here to read more of our previous analysis on BWE’s quarterly earnings.
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