Good sign: A street vendor walks along West Lake in Hanoi. According to a securities firm Vietnam exports remain a bright spot in the economy, buoyed by positive signals from major trading partners like the United States, the European Union and China. — AFP
HANOI: The fertiliser, retail, livestock, banking and logistics sectors are expecting significant profit growth in the third quarter of this financial year (3Q24), ranging from 22% to a whopping 1,620%, a recent report shows.
In the analytical report, Agribank Securities Joint Stock Company (Agriseco) highlighted the diminishing availability of sectors showing high profit growth in the third quarter.
However, experts at the securities firm maintained optimism for five industries: fertilisers, retail, livestock, banking and logistics.
Agriseco said that exports remained a bright spot in the economy, buoyed by positive signals from major trading partners like the United States, the European Union and China, with a noticeable uptick in new orders.
The other driver is a persistently low interest rate environment, offering historic opportunities for reduced borrowing costs. The securities firm predicted a continued downward trend in financial expenses for businesses, supporting profits in 3Q24 and beyond.
It also underscored 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 the end of the year, it said.
In terms of the fertiliser industry, Agriseco experts foresaw a robust upsurge in 3Q24 profits compared to the low levels of the previous year.
Projections suggested that profits after tax for the group are poised to reach 950 billion dong in 3Q24 and 3.2 trillion dong in the first nine months of 2024, reflecting a 1,620% and 243% surge year-on-year, respectively.
This growth momentum owed much to PetroVietnam Ca Mau Fertiliser JSC, which has concluded its plant depreciation period.
Other fertiliser manufacturers like LAFCHEMCO and DAP-Vinachem stand to benefit from China’s curbs on DAP fertiliser exports, paving the way for sustained profitability and substantial growth compared to the prior year.
According to Agriseco, the fertiliser 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 fertiliser demand is anticipated to improve with the shift to La Nina weather patterns, it is likely to bolster fertiliser prices’ recovery by the end of the year.
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 1.8 trillion dong in 3Q24 and 5.4 trillion dong in the first nine months of the year, representing substantial increments of 178% and 321% 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 Corp) also play a role.
For livestock, Agriseco estimated profits to hit 520 billion dong in 3Q24 and 1.5 trillion dong in the first nine months, up 28% and 75%, respectively. The growth is linked to lower feed prices.
Pork is now trading at 65,000 dong and 70,000 dong per kg, a 30% 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% profit surge in 3Q24, hitting 74.1 trillion dong – momentum that was sustained from the previous year.
Cumulatively, profits for this sector are estimated at 222.2 trillion dong for the first nine months, up 19% year-on-year.
This optimistic outlook hinges on several factors, including sustained credit growth of over 8% for the first nine months, surpassing last year’s figures.
Meanwhile, anticipated improvements in net interest margin exceeding 3.7% in the upcoming quarter are due to decreased funding costs outstripping the decline in lending asset yields.
While the industry-wide non-performing loan ratio in the second quarter held steady at 2.2%, Group 2 debts, or debts needing special attention, gradually lowered from 2.1% to 1.8% since the first quarter.
Vietinbank, VPBbank and Sacombank stand out as promising stock options for 3Q24.
In the logistics sector, profits are expected to soar by 22% to 8.1 trillion dong in 3Q24, showing a robust growth trend compared to the previous year. Agriseco’s analysis further predicted a profit of 24.4 trillion dong for the first nine months, up 18%.
These forecasts are underpinned by Vietnam’s escalating import-export value, up by 17% to US$511bil in the first eight months of 2024.
Seaport cargo traffic in the country surged by nearly 20%, 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.
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 was observed in the chemical tanker sector, with transport costs and charter rates soaring due to ongoing political uncertainties. — Viet Nam News/ANN
