Vietnamese listed companies’ corporate earnings in 2010 are not expected to be as sweet as 2009’s, but some sectors will still offer high growth potential.
Vietnamese listed companies’ corporate earnings in 2010 are not expected to be as sweet as 2009’s, but some sectors will still offer high growth potential.
Le Le Hang, Managing Director of Saigon Securities Incorporated’s (SSI) Research and Investment Department, said that in 2009, listed non-financial firms tracked by SSI’s research enjoyed 17 per cent growth year-on-year, with 20 per cent for all companies. Net corporate profit growth, meanwhile, was 70 and 63 per cent, respectively.
“Looking into 2010, we expect stable sales growth from listed companies as the economy is steadily improving. Specifically revenue will grow by 16 per cent for non-financials and 17 per cent for all companies,” Hang said in SSI’s Sector Watch report in March. She said the government’s subsidised bank interest rate programme was no longer available and companies faced higher expenses in 2010.
Material costs have also increased, pressuring profits, while a high equity provision reversal was not expected this year.
“Thus, we expect core operating profits in 2010 to grow roughly at 18 per cent on-year and net profits to rise by 5 per cent for non-financial companies and 12 per cent for all companies in 2010,” said Hang.
VinaSecurities earlier forecasted Vietnamese listed firms’ corporate earnings to grow 15-20 per cent annually over the next years. Vietnam Fund Management Company (VFM) predicted the whole market’s earnings growth rate would be between negative 5 per cent to positive 5 per cent this year.
Ho Chi Minh Securities Corporation thought total sales growth for listed firms would be 20 per cent on-year for 2010. Taking share dilutions into account, SSI expected 2010’s diluted earnings-per-share (EPS) growth for listed companies to be negative 7 per cent.
“Based on closing at February 26, this yields a 2010 price-to-earnings (P/E) ratio of 11, which is quite attractive considering the good growth potential of the country relative to its peers,” said Hang.
Dragon Capital, a leading foreign investment fund management company in Vietnam, forecasted EPS growth for listed stocks at 13 per cent in 2010, compared to 71.6 per cent in 2009. Sales growth would be higher at 22.5 per cent in 2010 from 15.6 per cent in 2009.
Market analysts said listed firms might not enjoy better-than-expected corporate earnings this year, but some sectors would grow higher. Therefore, investors should study sectors to find suitable investment opportunities.
“For 2010 we believe firms specilising in the banking, consumer goods, consumer discretionary and services, fisheries, natural rubber, information technology and real estate sectors are worth considering for investing,” said Hang.