Vietnam: Retail stocks see sharp increase in prices

Retail stocks are attracting strong cash flow with large gains in prices, in the context that the stock market is moving positively.

HÀ NỘI Retail stocks are attracting strong cash flow with large gains in prices, in the context that the stock market is moving positively.

Since the end of May, many retail stocks have increased significantly. For example, Mobile World Group (MWG) has increased by 13.1 per cent; FPT Retail (FRT) has risen by 14.4 per cent; Petrovietnam General Services JSC Corporation (PET) has gained by 15.2 per cent; and Masan Group (MSN) has risen 11 per cent.

The first quarter of 2023 recorded a relatively difficult business situation for this industry group. MWG reported a profit of just over VNĐ21 billion in the first quarter, a record low since listing. FPT Retail (FRT) even suffered a net loss of VNĐ5 billion, recording the biggest quarterly loss of this retail giant since 2020.

After a difficult period, retail sales of consumer goods tend to increase again. Data from the General Statistics Office shows that the total retail sales of consumer goods and services in the past five months were estimated at VNĐ2.52 trillion (US$102 million), up 12.6 per cent over the same period last year. This is the highest growth rate ever recorded in the same period in years from 2015 onwards.

In the context that exports continue to face difficulties, the domestic market of nearly 100 million people, 50 per cent of which is a young population, with diverse consumer needs, is really a potential market for retail businesses.

A series of policies on taxes and consumer loans have been issued, which will further promote consumption growth. At the end of April, the Government issued Resolution 59/NQ-CP on solutions to support and remove difficulties for borrowers to serve their daily life and consumption needs.

The Ministry of Finance in April also proposed to continue the policy of reducing VAT by 2 per cent in 2023. The expected implementation time is from July 1 to the end of December 31, 2023.

“The interest rate support packages, the postponement of income tax and land rent payments and the reduction of VAT will be the foundation for GDP growth in the second quarter and the retail group will benefit. In addition, lowering lending rates also help to reduce the debt pressure of retail businesses,” said ABS Securities.

However, Việt Dragon Securities (VDSC) emphasised that amid the context of an economic downturn, consumption cannot recover quickly. Essential items will still witness high sale volume, whereas non-essential products, especially technology devices, may experience the sharpest decline in consumption in 2023.

“The economy can only recover stronger in 2024 when orders start to return and workers’ incomes improve,” VDSC said.

In its latest report, Bảo Việt Securities (BVSC) forecasts that net profit of Mobile World Group (MWG) in 2023 will drop sharply by 70 per cent compared to last year, to VNĐ1.23 trillion.

BVSC expects that the business results of Mobile World will recover significantly after the end of 2023, forecasting net profit in 2024 and 2025 will reach VNĐ2.86 trillion and VNĐ3.83 trillion, respectively; about the same level as in 2019 but still lower than the peak in the period of 2021 – 2022. VNS