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Wednesday, September 22, 2021

Big-ticket stocks widely available

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Going hand in hand with recent rallies of the VN-Index are stocks whose market prices are VND100,000 apiece or more. Most of them are blue chips which appear as market leaders and deliver stable business results.

By the end of May, Vietnam’s stock market might have accommodated some 26 stocks whose market prices were more than VND100,000 per stock. In addition to the veterans, other players have joined the game, for instance Digiworld (DGW), Nam Duoc Joint Stock Company (NDC), Masan (MSN), Novaland (NVL), Printing Joint Stock Company No. 4 (IN4) and Vietnam Exhibition Fair Center (VEF), to name but a few. Of these, the most notable is the two-fold price spike of NVL against the end of 2020. Some other stocks have also recorded two-digit growth rates—DHC, NDC, THD, MSN, VIC and VHM are some of the best known.

The majority of these big-ticket stocks have already announced their business plans for 2021 which have targets higher than in 2020. When it comes to sales, Vingroup (VIC) is leading the way. This year, Vingroup sets a net sales target of VND170 trillion, a jump of 54% year-on-year. Novaland aims sales of VND27.5 trillion, five times higher than in 2020. Meanwhile, Masan aims at net sales of between VND92 trillion and VND102 trillion, a growth rate of 19%-32% over 2020.

However, some businesses opt for more humble sales growth rates compared with the levels in 2020. Typical of them is Son La Sugar Joint Stock Company (SLS). In the 2020-2021 crop year, SLS plans to gross over VND816 billion in sales and VND26 billion in after-tax profit, declining by 23% and 78%, respectively, compared with the previous crop year. Saigon VRG (SIP) also plans to reap profit of VND520 billion in 2021, only half of the level in 2020. Likewise, Foripharm (DP3) pursues a goal of VND72 billion in profit, way lower than the VND143 billion-level last year.

Impressive Q1 business results

The majority of listed companies whose stock prices are at the highest delivered impressive business results in the first quarter of this year. A case in point is Vinhomes (VHM), which grossed a total consolidated net sales of VND12,986 billion in Q1, a growth rate of 99% year-on-year, mainly due to the growth in retail and board lots of real estate stocks. Thaiholdings (THD) ended Q1 grossing sales of VND1,087 billion, a six to seven times higher than in the same period last year.

Similarly, Novaland produced impressive business results in the first quarter as both of its sales and net profit posted high growth. Its net profit reached almost VND4,507 billion, a jump of 158% over the same period last year, and its after-tax profit was more than VND701 billion, a 132% surge year-on-year.

The Q1 financial report released by Masan shows that the company attained net sales of VND19,977 billion, rising by 13.3% over the year-earlier period. After deducting all fees,

Masan still reaped an after-tax profit of VND343 billion in Q1. As a side note, it lost VND216 billion in the year-ago period. Masan expects to continue to gain more profit in the coming quarters.

Vietjet also experienced a dramatic recovery. In the first quarter, Vietjet’s sales and after-tax profit reached VND2,845 billion and VND110 billion, respectively. Saigon VRG unexpectedly announced its profit in Q1-2021 was four times higher than Q1-2020. The reason was, in addition to rising sales, the company did not have to set aside provisions as it did in the year-earlier period.

The bulk of big-ticket stocks with high market prices on the bourses are profitable businesses that yield stable business results. They are also market leaders which have been picked by big investment funds and investors.

The emergence of many big-ticket stocks whose market prices are high mirrors investors’ expectations of the listed firms concerned and contributes to the growth of capitalization of Vietnam’s stock market. However, once the market price of a stock has entered the high zone, individual investors whose capital is limited will find it increasingly tougher to access it.

By Linh Trang

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