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Thursday, December 2, 2021

Vietnam’s current growth stocks

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Earlier this month, the VN-Index had risen 34% against early April, making Vietnam’s stock market one among the bullish markets worldwide. However, compared with the beginning of this year, the VN-Index is still nearly 8% lower, as it has not completely recovered from the crash caused by the Covid-19 epidemic since late January.

Certain stocks have delivered a far more brilliant performance than the general market, having regained all the value lost over the past time. They have even recorded a sharp rise compared with the beginning of the year and continuously set new heights. Statistics show that by the end of last week, 26 stocks on all three exchanges had registered a growth rate of 100% or more against early this year.

Meanwhile, compared with the time when the market bottomed out in late March, 33 stocks have achieved a growth rate of over 100%, including 16 penny stocks, whose market prices are VND10,000 per share or less. Taking the lead  in this period is Sao Thang Long Investment Joint Stock Company (DST) that jumped by 3.6 times, from around VND900 to VND4,600 per share as of June 5.

From the loss of VND6.5 billion in 2019, DST has set a profit target of VND6 billion for this year and plans to pay stock dividends at a rate of 3%. In the first quarter, while quite a few enterprises suffered heavy losses due to the disease, DST still recorded a profit of more than VND1.2 billion, a huge surge from the loss of VND94 million in the same period last year.

Another super penny stock that has risen strongly thanks to the breakthrough results year-on-year is Ha Tinh Mineral and Trading Joint Stock Corporation (MTA). Their stock price having gone up 218% against early April and 153% from the beginning of the year, reaching VND3,800 per share. From the consolidated loss of more than VND9.1 billion in the first quarter of 2019, MTA unexpectedly reaped a profit of nearly VND41.8 billion this year.

As explained by the company, the pork price hike helps the companies associated with them in the agricultural sector operate more effectively than last year. Specifically, Mitraco Livestock Joint Stock Company (MLS) recorded an additional VND29.36 billion in their profit, Ha Tinh Agro-Forestry Development Joint Stock Company VND16.4 billion, and Thien Loc Animals Feed Stock Company VND3.55 billion. Notably, MLS shares grew 141% in this period.

Duc Giang Chemicals Group Joint Stock Company (DGC) saw a sharp increase of 66% in their Q1 profit, helping their stock price pick up 114% against end-March, raising the expectation that the company’s profit will further grow strongly this year and their stock price ascend to new heights. It is worth noting that chemical and pharmaceutical stocks like DGC have performed quite well recently, despite the disease outbreak.

In addition, it is notable that those stocks displaying signs of successful restructuring and recording spectacular profit growth after the challenging period is now the destination of cash flows. For example, the shares of Hoa Sen Group (HSG) have increased by 145% over the end of March. Following the mergers and acquisitions that have attracted much attention recently, KIDO Group (HOSE: KDC) has achieved a rise of 132% in their stock price. Hoang Anh Gia Lai Group (HAG), meanwhile, has registered a growth rate of 112%.

Benefiting from the situation of the economy

While the Covid-19 epidemic has dealt a severe blow to the economy and ravaged many industries and companies, certain sectors and enterprises are said to be benefiting from the current context. First, it involves food and livestock groups, when the prices of these goods, especially pork, are constantly going up at a high level, giving their producers a surge in profits.

In addition to MTA, Dabaco Vietnam Joint Stock Company (DBC) is considered another super stock this year. Given the production of food, particularly pork, as their main business, DBC in the first quarter alone brought in a profit of more than VND348 billion, 17.4 times higher year-on-year. As of this May, their accumulated profit after tax had amounted to over VND578 billion, already higher than the target of VND457 billion for this year. As a result, DBC’s stock price has grown 238% against the end of March, earning it a slot in the top-three stocks with the biggest increase during this period. Compared with the beginning of this year, their stock price has risen 162%.

Construction stocks are said to be another beneficiary as the Government is looking to boost public investment in an attempt to prop up the economy. The shares of SCI E&C Joint Stock Company (SCI) are now 134% higher than in late March. CIENCO4 (C4G), a company continually participating in bidding for highway construction projects, has seen their stock price picking up 127%. For 36 Corporation (G36), LICOGI 16 Joint Stock Company (LCG) and Petrolimex Construction 1 Joint Stock Company Group (PCC), the rise is 118%, 114% and 113% respectively.

The demand for building materials will significantly increase when work starts on public investment projects—that’s why the prices of stocks in this group have picked up recently. Binh Duong Mineral and Construction Joint Stock Company (KSB), with construction stone supply as their strength, has registered a growth rate of 125% compared to the end of March, as investors expect major projects such as Long Thanh International Airport will get off the ground as early as 2021 and require a large volume of such materials.

After years of struggle, the shares of Tan Tao Investment and Industry Corporation (ITA) have recently surged unexpectedly, having risen 154% over the past two months. ITA had nine out of 10 sessions setting new heights from May 25 to June 5, becoming the strongest stock in the market during this period. It is worth noting that liquidity has also markedly rebounded along with prices, whose value of trading volume made in order matching amounting to up to tens of millions of shares per day.

After recording an after-tax profit of VND206 billion in 2019, an increase of 249% from 2018, ITA expects VND271 billion of such profit this year, up 32%. It has come up with a plan to complete the legal procedures for 230 hectares of Tan Duc Industrial Park within this year and a plan to develop an industrial park stateside. Remarkably, Board Chairwoman Dang Thi Hoang Yen has shown up for the first time in many years at a recent online meeting of shareholders. Given its positive progress in corporate restructuring, plus the sector the company is active in currently benefiting from international investment shift, it is understandable that ITA has been a powerful magnet for cash flows.

By Thuy Le

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