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Pocket Option: Power Sector Stocks Investment Strategy 2025

Pocket Option: Power Sector Stocks Investment Strategy 2025

9 min to read

09 April 2025

9 min to read

Power Sector Stocks: Comprehensive Analysis and Investment Strategy 2025

Vietnam's GDP growth of 6.8% in 2024 has led to a 12% increase in electricity demand - opening a golden opportunity for investors in power sector stocks. The article provides detailed analysis of 15 potential stocks, 5 proven investment strategies, and ways to avoid the 3 biggest risks when investing in power sector stocks amid the renewable energy boom in Vietnam.

Overview of Power Sector Stocks in Vietnam

The Vietnamese power sector stocks market grew by 15.7% in Q1/2025, far exceeding the 8.2% growth of the VN-Index. With total installed capacity reaching 84.2 GW at the end of 2024 and electricity demand increasing by 8-10% annually (Ministry of Industry and Trade Report 03/2025), Vietnam needs an additional 5-7 GW of new capacity each year – requiring investment capital of approximately 8-10 billion USD. This has made power companies the focus of investment with revenue growth potential of 12-15% over the next 5 years.

There are currently 32 power sector stock codes listed on HOSE and HNX with a total market capitalization of 380,000 billion VND (equivalent to 15.2 billion USD), accounting for about 7.8% of the total market capitalization. As of April 2025, this group of stocks is trading at an average P/E of 12.5 times – lower than the 5-year average of 14.2 times, indicating attractive valuation signs.

Investing in power sector stocks requires deep understanding of industry structure and specific regulations. Investors on the Pocket Option platform can access in-depth technical analysis tools for 32 power sector stocks, including RSI, MACD, and Bollinger Bands indicators that have been optimized specifically for the trading characteristics of this stock group.

Segment	Key Features	Average ROE	Current P/E	Representative Companies
Hydropower	Low operating costs (15-20%), weather-dependent	12-15%	9.5-11.2	VSH, SJD, CHP
Thermal power	Stable output, high fuel costs (65-75%)	10-12%	8.2-10.5	POW, NT2, QTP
Solar power	Investment costs reduced by 35% since 2020, profit margin 30-40%	7-12%	14.5-16.8	GEG, BCG, PC1
Wind power	High efficiency (38-42%), maintenance costs increasing 15%/year	13-18%	15.3-18.2	REE, PC1, GEG

Factors Affecting Power Sector Stock Prices

To invest successfully in power sector stocks, investors need to analyze the following 5 main groups of factors:

5 Macroeconomic Factors Determining Power Stock Prices 2025-2026

Power Development Plan VIII was officially approved (Decision 500/QD-TTg dated May 15, 2023) with the goal of increasing the proportion of renewable energy to 30.9-39.2% by 2030 and 67.5-71.5% by 2050. This has created a new investment wave with a total capital of 14.5 billion USD in the renewable energy sector in 2024, while new coal-fired power projects face difficulties in raising capital from international financial institutions.

The new electricity pricing mechanism according to Decision 05/2024/QD-TTg (effective from June 1, 2024) allows EVN to adjust electricity selling prices within a range of ±5% each quarter, having a positive impact on power plants’ cash flow. In Q1/2025, the average electricity selling price increased by 3.2% compared to the same period in 2024, helping to improve profit margins of power generation companies by an additional 1.8-2.5% depending on the segment.

Policy Factor	Impact on Power Stocks	Forecast 2025-2026
Power Plan VIII	+25-30% market cap for renewable energy group, -5-10% for coal thermal power	Continued capital allocation to renewables, especially offshore wind
Electricity price adjustment	Each 1% price increase = +2.5-3% industry profit	Expected to increase by an additional 3-5% in 2025
CIT incentives	10% tax reduction in first 15 years for renewables	Maintained until 2030, saving 12-15% in costs
Net Zero 2050 Commitment	Mobilizing 12-15 billion USD/year for clean energy	Acceleration from 2026 with new JETP mechanism

Segment-Specific Factors in the Power Industry

The hydropower stocks achieved 70-75% EBITDA margin in Q1/2025 thanks to favorable hydrology (rainfall increased by 12.5% compared to the 10-year average). The Da Nhim-Ham Thuan-Da Mi Hydropower Plant (DNH) recorded a record output of 1.82 billion kWh (+22% YoY), bringing ROE from 14.8% to 18.2% in just one quarter.

For thermal power, Indonesia’s FK-SP 4,200 kcal/kg coal price increased from 64 USD/ton to 82 USD/ton (+28%) in Q1/2025, reducing PPC’s profit margin from 12.5% to 9.8%. Meanwhile, NT2 with gas input from Cuu Long field increasing only 5% maintained a stable profit margin at 15.2%.

Hydropower: Profit margin ranges from 45-60% depending on rainfall (2024: increased 8.2% compared to 2023)
Thermal power: Fuel costs account for 65-75% of production costs, imported coal prices increased 22% in Q1/2025
Solar power: End of preferential FIT price cycle, ROE decreasing from 12% to 7-8% from 2026
Wind power: New bidding mechanism (Decision 15/2024/QD-TTg) changing the competitive landscape from Q3/2025
Power transmission: 120,000 billion VND investment in grid in 2025, creating opportunities for construction companies

Analysis of 10 Most Potential Power Sector Stocks in 2025

After analyzing 32 power sector stock codes based on 15 financial criteria and 8 technical factors, we have selected 10 stocks with outstanding growth potential in the next 12-18 months:

Stock Code	Segment	Current Price (VND)	P/E	EPS (TTM)	Key Strengths	Risks to Note	Upside Potential
POW	Diversified	15,350	11.8	1,301	Complex of 6 plants (5,200 MW), Nhon Trach 3&4 LNG project (1,600 MW)	Highly volatile gas input prices	+18-22%
REE	Multi-sector + hydropower	72,300	9.5	7,611	Portfolio of 200 MW hydropower, 140 MW wind power, stable real estate sector	Cyclical nature of M&E segment	+25-30%
NT2	Gas thermal power	24,750	8.4	2,945	95.2% operating efficiency, long-term gas contracts until 2028	LNG conversion timeline from 2026	+15-18%
PC1	Construction + Renewables	31,100	12.6	2,468	Construction backlog 8,500 billion, portfolio of 120 MW wind power under development	Debt pressure of 9,800 billion VND	+20-25%
GEG	Renewables	18,500	15.3	1,209	Portfolio of 90 MW solar power, 50 MW wind power, new 150 MW project	High valuation, changes in FIT price mechanism	+12-15%
VSH	Hydropower	28,750	9.2	3,124	156 MW capacity, stable cash flow, dividend yield 8-10%	Dependent on hydrology, slow growth potential	+10-12%

Technical analysis on the Pocket Option platform shows that 8/10 of these stocks are in a medium-term uptrend, with 6 stocks currently trading above the MA50 line and having gradually increasing trading volume over the past 3 months.

Effective Investment Strategies for Power Sector Stocks

Investing in power sector stocks requires strategies appropriate to each market phase and the risk appetite of each investor. We propose the following 3 main strategies:

Optimal Capital Allocation Strategy by Market Phase 2025-2026

Based on analysis of the power sector cycle and market forecast for 2025-2026, we propose the following capital allocation ratio:

Segment	Weight Q2-Q3/2025	Weight Q4/2025-Q1/2026	Expected ROI	Recommended Stocks	Risk Level (1-5)
Hydropower	35-40%	25-30%	12-15%	VSH, SJD, CHP	2
Thermal power	15-20%	20-25%	10-12%	NT2, POW	3
Renewable energy	30-35%	40-45%	18-22%	GEG, PC1, REE	4
Transmission and distribution	10-15%	10-15%	8-10%	PC1, TV2	2

Important note: Q2-Q3/2025 is the rainy season so the proposed hydropower weight is higher, while Q4/2025-Q1/2026 is the dry season so shift towards renewable energy. Investors on Pocket Option can use the portfolio management tool to adjust weights in real-time.

Dividend strategy: Focus on VSH, SJD, NT2 with dividend yields of 8-12%, applying DRIP (dividend reinvestment plan)
Growth strategy: Allocate 60-70% to PC1, GEG, REE with an 18-24 month holding plan
Value strategy: Look for stocks with P/B < 1.2 and ROE > 12%, currently including PPC, QTP
Trading strategy: Combine Fibonacci analysis, Bollinger Bands with hydropower seasonal cycles

Advanced Risk Management when Investing in Power Sector Stocks

Although power sector stocks are often considered safe investments, investors still need to apply the following risk management measures:

Risk	Impact Level	Early Warning Signs	Specific Preventive Measures
Weather risk	High (hydropower, renewables)	El Nino/La Nina forecast, ONI index > 1.0	Reduce hydropower weight to 15-20% when El Nino is forecasted, set stop-loss at -12%
Policy risk	Very high (all segments)	Draft law amendments, new decrees on electricity prices	Monitor National Assembly meeting schedule and Ministry of Industry and Trade website, maintain 15-20% cash ratio
Financial risk	Medium-high	D/E ratio > 1.5, interest expense/EBIT > 30%	Prioritize companies with D/E < 1.0, consider selling when ratio exceeds 1.5
Supply-demand risk	Medium	Electricity growth forecast < 6%, reserve margin > 30%	Monitor quarterly reports on A0’s reserve margin, reduce thermal power weight

The Pocket Option platform provides automatic risk alert tools for policy events and sudden stock price changes. Investors should set alerts when prices drop more than 7% in a session and when trading volume increases suddenly by more than 200% compared to the 20-session average.

Development Trends 2025-2030 and Long-term Investment Opportunities

Vietnam’s power industry is in a period of profound transformation, with 5 main trends that will shape the power sector stock market over the next 5 years:

Trend	Forecast to 2030	Impact on Stocks	Benefiting Companies
Green energy transition	Renewable energy share reaching 38% by 2030 (from current 24%)	CAGR 18-22% for renewable companies during 2025-2030	GEG, REE, BCG, PC1
Electricity market liberalization	Competitive retail market completed by 2027-2028	Profit margins increase 3-5% for low-cost units	POW, NT2, REE
Offshore wind power	3-5 GW installed capacity by 2030 (currently 0)	New market worth 10-12 billion USD	PVN, PC1, PCC1
Smart grid	12 billion USD investment in smart grid development	Major opportunity for construction and electrical technology companies	PC1, TV2, REE
Green hydrogen and energy storage	Pilot development 2025-2027, commercialization 2028-2030	Breakthrough growth potential from 2028	GEG, BCG

According to Pocket Option‘s in-depth analysis, power sector stocks in Vietnam will strongly differentiate based on their ability to adapt to the above 5 trends. It is estimated that 30% of current businesses will grow strongly (CAGR >15%), 40% will grow steadily (CAGR 8-12%), and the remaining 30% will face difficulties (CAGR <5%) during 2025-2030.

In particular, with the Net Zero 2050 commitment and 15.5 billion USD funding from JETP (Just Energy Transition Partnership), investment capital flow into renewable energy will double from 2026, creating price momentum for power sector stocks with sustainable development orientation.

Offshore wind power: Ke Ga area (Binh Thuan) and Soc Trang will commence construction of 1.5 GW in 2026-2027
Solar power combined with storage: Battery storage technology prices decreasing by 38% during 2025-2028
Grid: 500kV circuit 3 project (worth 32,000 billion) completed in 2026 opening transmission opportunities
LNG: 5 major projects with total capacity of 9.5 GW operational during 2025-2028

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Conclusion: 5 Steps to Build an Effective Power Sector Stock Portfolio

Investing in power sector stocks in Vietnam offers attractive opportunities with expected returns of 15-20%/year during 2025-2027. To optimize investment performance, investors should apply the following 5-step process:

Step 1: Seasonal capital allocation – Adjust hydropower/thermal power weights according to rainy/dry seasons (Q2-Q3 vs Q4-Q1), with a difference ratio of 15-20% between seasons to take advantage of the industry’s cyclical characteristics.

Step 2: Stock screening based on financial criteria – Prioritize companies with ROE >12%, debt/equity ratio <1.0, dividend yield >5%, and P/E lower than 15% compared to the 5-year industry average. Pocket Option‘s screening tool helps accomplish this step in minutes.

Step 3: Development strategy assessment – Analyze 3-5 year investment plans, proportion of renewable energy in the portfolio, and ability to implement new projects. Prioritize companies with plans to increase renewable energy proportion to >50% by 2030.

Step 4: Determine buying time – Combine technical analysis (Fibonacci, RSI, MACD) with important information disclosure timing (financial reports, project COD) to determine optimal buying points. Set purchase limits in the range of -5% to +2% around the target.

Step 5: Active portfolio management – Set stop-loss at -12% for each stock, consider taking partial profits when reaching +20%, and rebalance the portfolio quarterly. Maintain 10-15% cash to take advantage of correction opportunities.

With Pocket Option‘s in-depth analysis tools and portfolio management system, investors can easily monitor and adjust their power sector stock investment strategy in real-time, optimizing profits in all market conditions.

Investing in power sector stocks is a long-term strategy that brings both profits from price increases and stable dividend flows. With electricity demand growing at 8-10%/year and an increasingly strong green transition process, this group of stocks will continue to be an important pillar in the portfolio of smart investors in Vietnam.

FAQ

Which electricity sector stocks have the most potential in Vietnam currently?

Based on Q1/2025 analysis, the 5 most promising electricity sector stocks currently include: REE (ROE 16.8%, owning 340MW of renewable energy), PC1 (25% YoY profit growth thanks to construction backlog of 8,500 billion), POW (dominant position with 5,200MW, LNG Nhon Trach 3&4 projects nearing completion), GEG (renewable energy portfolio reaching 140MW with 150MW new developments), and NT2 (dividend yield of 10-12%, long-term gas contracts until 2028).

How to evaluate an electricity sector stock before investing?

Effective evaluation of electricity sector stocks requires analysis of: (1) Financial structure (ROE >12%, D/E <1.0), (2) Asset portfolio (renewable energy proportion, plant age, reserve capacity), (3) PPA contracts (term, CIF/FIT selling price), (4) Expansion plans (progress, funding sources, expected IRR), (5) Dividend payment capability (payout ratio <70%), and (6) Valuation (P/E, EV/EBITDA lower than industry average by 10-15%). Particularly important is assessing adaptability to ESG trends and green energy.

How do hydroelectric stocks differ from other renewable energy stocks?

Hydroelectric stocks have EBITDA margin of 65-75%, low operating costs (15-20% of revenue), plant lifespan of 30-50 years, stable ROE of 12-15%, dividend yield of 7-12%, but depend on seasonal hydrology (Q2-Q3 vs Q4-Q1). Meanwhile, other renewable energy stocks have EBITDA margin of 55-65%, higher operating costs (25-30%), lifespan of 20-25 years, fluctuating ROE of 8-18% (depending on pricing mechanisms), lower dividend yield (3-7%) but higher growth potential (CAGR 15-20% compared to 5-8% for hydroelectric).

What are the main risks when investing in electricity sector stocks?

Five main risks when investing in electricity sector stocks: (1) Weather risk - El Nino reduces hydroelectric output by 25-30%, (2) Policy risk - changes in FIT pricing mechanism (affecting project NPV by -30%), (3) Financial risk - increasing cost of capital (interest rate +1% = ROE -1.2%), (4) Exchange rate risk - each 1% USD increase reduces profit by 0.8-1.2% (due to foreign currency loans), and (5) Technology risk - old equipment increases unplanned downtime. To mitigate, diversify investments across segments and apply seasonal capital allocation strategies.

What are the development trends of Vietnam's electricity sector in the next 5-10 years?

Vietnam's electricity sector 2025-2035 will shift according to 5 main trends: (1) Renewable energy reaching 38% by 2030 and >65% by 2045 (CAGR 18-22%), (2) Strong development of offshore wind power with an expected 5-7GW by 2030 and 20GW by 2040, (3) Electricity market liberalization completed by 2027-2028 with competitive retail market mechanisms, (4) LNG becoming a transitional power source (9.5GW by 2028), and (5) Battery Energy Storage Systems (BESS) and smart grids with investments of ~$20 billion by 2035. Green hydrogen technology is expected to be commercialized from 2028-2030.