Mirae Asset Vietnam assessed that after a year of strong profit growth in 2021, the growth rate in 2022 will decelerate. The global inflation burden will create pressure on companies' profit margins due to the cost of input materials and increased transportation costs. Inflation risks and the rapid increase of interest rates by the US Federal Reserve will put pressure on raising domestic interest rates.
Based on the above assumptions, the research team of Mirae Asset forecasts that VN-Index's EPS growth in 2022 will drop to 17.5%, lower than the market's general consensus of 18%, according to Bloomberg statistics. This forecast is generally in line with the 2022 growth plan of enterprises, with the total profit before tax of 320/402 enterprises expected to increase by 15.8% compared to 2021.
Corresponding to the forecast P/E valuation range at the end of 2022 from 12.8 to 15.1x, Mirae Asset believes that VN-Index may return to the 1,300 - 1,530 points range in the second half of the year. Therefore, experts suggest 3 possible scenarios for Vietnam’s stock market:
Bad: VN-Index will continue to decline as risk aversion prevails and finds strong support at 1,060 points (at 10-year average P/E minus 2 standard deviations of 10.5 times).
Normal: VN-Index finds the lowest level of the year at 1,156 points and will continue to rise to 1,300 points (10-year average P/E minus 2 standard deviations of 12.8 times).
Positive: VN-Index will regain the 1,530 points level, equivalent to P/E returning to the long-term average.
In the second half of the year, inflation and interest rate policy are the two main risks that investors need to follow up. Vietnam's stock market is expected to continue to fluctuate according to information on inflation, inflation expectations, and the actions of central banks, especially the FED.
In the first half of 2022, total retail sales in Vietnam reached approximately 2,174 billion VND (up 11.4% over the same period), of which, in the second quarter of 2022, it reached 1,112 billion VND (up 17.3%). The impact of inflation on retail sales, in general, is still not significant because the increase in prices of essential goods is not large. However, the lag between essential commodities prices and petrol prices may narrow shortly.
Seafood export, as expected, is still the business group that will achieve outstanding results in 2022. Mirae Asset assesses revenue and profit for the seafood export enterprises will boom in the second quarter of 2022. Beverage, food export, and sugar production will witness slight growth in 2022. Beverages will be the best business group as domestic demand recovers.
In May 2022, during the working session between the Oil and Gas Group (PVN) and the city government. In Can Tho, it is reported that the Block B - O Mon gas power chain is expected to have the final investment decision in July 2022, creating a premise for the whole Block B - O Mon project chain to start construction in the second half of the year. In addition, the Block B (Phu Quoc POC) gas field operator is also preparing the necessary conditions to open EPCI bidding packages. The aim is to award contracts related to gas field development (EPCI contract, FSO contract, etc.) right after the Block B project chain receives the FID.
According to EVN, Vietnam's electricity consumption increased by 5.3% over the same period of 5 months. Wind energy has the highest growth rate, with output increased by 480% in May and 382% in 5 months. Mobilization of the hydropower group also improved by 48% in May and 27% in 5 months. On the contrary, solar power showed signs of slowing down in May with a decrease of 12% and flat for 5 months.
The industrial park market in Binh Duong and Long An is attracting the attention of investors. For example, VSIP 3 industrial park in Binh Duong has just started construction, but so far, there have been more than 30 corporations and companies interested in researching and developing production, equivalent to 175 hectares of industrial land. Long An also received Coca-Cola’s factory investment project worth more than 136 million USD in Phu An Thanh industrial park and BWID's first two ready-built warehouse projects in Xuyen A & Vinh Loc 2 industrial zones.
In the first half of the year, the volume of seaport clearance was estimated at 371 million tons, up 1.8% over the same period. Customs clearance container volume is estimated at 12.8 million TEU, up 0.5%. Container clearance activities maintained positive growth, although the growth rate is showing signs of slowing down. In the first half of 2022, the total import and export value is estimated at 371 billion USD, up 16.8%.
In June and the first 6 months of the year, Vietnam's textile and garment export value was estimated at 3.65 billion USD, up 18.8% over the same period, and 18.7 billion USD, up 21.6 %. Garment manufacturing activities maintained a strong growth momentum when the industrial production index in June and 6 months increased by 23.1% and 23.3%, respectively, over the same period in 2021.
According to Fiinpro, in May 2022, steel and coated steel sheet output decreased by 49% over the same period, reaching 1.49 million tons. By the end of May, Vietnam’s steel output reached 10.48 million tons, down 22%. For the export segment, construction steel is the only bright spot in terms of growth, with export volume in May 2022 reaching 176,872 tons, up 23%. Total construction steel exports in 5 months reached 1.03 million tons, up 49%, thereby helping to maintain the industry's export steel output at 2.8 million tons, down slightly in 5 months.
Compiled by VietnamCredit