Exports remain a bright spot in the economy, buoyed by positive signals from major trading partners like the US, the European Union, and China, with a noticeable uptick in new orders.
The fertilizer, retail, livestock, banking, and logistics sectors are expected to witness significant profit growth in the third quarter (Q3), ranging from 22 percent to an impressive 1,620 percent, a recent report has revealed.
In the analytical report, Agribank Securities Joint Stock Company (Agriseco) highlights the diminishing availability of sectors showing high-profit growth in the third quarter.
However, experts at the securities firm maintain optimism for five industries: fertilizers, retail, livestock, banking, and logistics.
Agriseco said that exports remain a bright spot in the economy, buoyed by positive signals from major trading partners like the US, the European Union, and China, with a noticeable uptick in new orders.
The other driver is a persistently low interest rate environment, offering a historic opportunity for reduced borrowing costs. The securities firm predicts a continued downward trend in financial expenses for businesses, supporting profits in Q3 and beyond.
It also underscores the importance of growth in total assets and equity as a factor driving profit expansion. By scaling up, companies can enhance operational capabilities and production capacities to align with the ongoing economic recovery by year-end.
In terms of the fertilizer industry, Agriseco experts foresee a robust upsurge in Q3 profits for industry players compared to the low levels of the previous year.
Projections suggest that profits after tax for the group are poised to reach VNĐ950 billion (US$38.39 million) in Q3 and VNĐ3.2 trillion in the first nine months of 2024, reflecting a remarkable 1,620 percent and 243 percent surge year-on-year, respectively.
This growth momentum owes much to PetroVietnam Cà Mau Fertiliser JSC, which has concluded its plant depreciation period.
Other fertilizer manufacturers like LAFCHEMCO and DAP - Vinachem stand to benefit from China's curbs on DAP fertilizer exports, paving the way for sustained profitability and substantial growth compared to the prior year.
According to Agriseco, the fertilizer sector's standout feature lies in the current stability of urea prices and production volumes, with expectations of a significant uptick as the year draws to a close with the impending winter crop season.
As the global fertilizer demand is anticipated to improve with the shift to La Niña weather patterns, it is likely to bolster fertilizer prices' recovery by year-end.
Likewise, the retail segment is poised to maintain a robust growth trend. Projections indicate that the industry's profits after tax are expected to soar to VNĐ1.8 trillion in Q3 and VNĐ5.4 trillion in the first nine months of the year, representing substantial increments of 178 percent and 321 percent over last year, respectively.
The retail sector's recovery is driven by factors like a rebound in consumer retail demand supported by policies, consumer spending, and tourism. Slowing price competition among retail chains, especially in electronics, will also boost company profit margins.
Individual segments like pharmaceuticals (FPT Digital Retail JSC) and groceries (Mobile World Investment Corporation) also play a role.
For livestock, Agriseco estimates profits to hit VNĐ520 billion in Q3 and VNĐ1.5 trillion in the first nine months, up 28 percent and 75 percent, respectively. The growth is linked to lower feed prices.
Pork is now trading at a price of VNĐ65,000 - 70,000 per kg, a 30 percent increase since the African swine fever outbreak in late 2023 and early 2024. A livestock ban in 2025 will force many breeders to relocate or halt operations.
In the banking sector, Agriseco foresees a 24 percent profit surge in the third quarter of 2024, hitting VNĐ74.1 trillion — momentum that was sustained from the previous year. Cumulatively, profits for this sector are estimated at VNĐ222.2 trillion for the first nine months, up 19 percent year-on-year.
This optimistic outlook hinges on several factors, including sustained credit growth of over 8 percent for the first nine months, surpassing last year's figures.
Meanwhile, anticipated improvements in net interest margin (NIM) exceeding 3.7 percent in the upcoming quarter are due to decreasing funding costs outstripping the decline in lending asset yields.
While the industry-wide non-performing loan (NPL) ratio in the second quarter holds steady at 2.2 percent, Group 2 debts (or debts needing special attention) have gradually decreased from 2.1 percent to 1.8 percent since the first quarter.
Notably, Vietinbank, VPBbank, and Sacombank stand out as promising stock options for the third quarter.
In the logistics sector, profits are expected to soar by 22 percent to VNĐ8.1 trillion in Q3 this year, showing a robust growth trend compared to the previous year. Agriseco's analysis further predicts a total profit of VNĐ24.4 trillion for the first nine months, up 18 percent.
These forecasts are underpinned by Vietnam's escalating import-export value, up by 17 percent to $511 billion in the first eight months of 2024. Seaport cargo traffic in the country has surged by nearly 20 percent, indicating a substantial uptick in demand and a promising sign of economic recovery.
On the global transport front, international freight rates remain on a steep incline. Notably, in the container transport market, fares along key Asia-Europe routes have tripled due to heightened conflicts in the Red Sea since late 2023.
A similar trend is observed in the chemical tanker sector, with transport costs and charter rates soaring due to ongoing political uncertainties.
(VNS)
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