The climax of business results season is marked by the announcement of first-quarter earnings from nearly 1,000 businesses. While the overall market has witnessed a surge in gains, the degree of increase differs across industry groups. Some business sectors have reported exceptional profit gains, accurately mirroring macroeconomic consumer demand expectations, resulting in a significant increase in stock prices, while others have not.
STOCK PRICES SOAR WITH CORPORATE PROFITS
Vietnam Airlines’ stock, HVN, exemplifies this trend. Immediately after the airline disclosed its record-breaking profit of VND4,441 billion in the first quarter, its shares swiftly jumped. During the afternoon trading session on May 3, HVN’s stock surged to a ceiling price of VND18,500 per share, its highest price in 23 months since June 2022. At the close of trading, HVN had no sell orders, with nearly 4.5 million shares at the ceiling price remaining unfulfilled.
Similarly, ACV recently reported a record profit gain of over VND2,920 billion in the preceding first quarter. Following this news, ACV’s stock price has risen steadily over the past three sessions, with a 19% increase and exceptional trading volume reaching over 1 million shares on May 2. At VND94,400 per share, ACV is approaching its historical peak achieved in January 2022.
Within the retail sector, The Gioi Di Dong (MWG) recently announced its first-quarter 2024 financial report, disclosing net revenue of VND31,486 billion, an increase of over 16% year-on-year and fulfilling 25% of its annual revenue target. After deducting expenses, MWG’s net income reached VND902 billion, 43 times more than the same period in 2023 and its highest in six quarters since the third quarter of 2022.
MWG’s stock price also surged 14% in six sessions following the profit announcement. This marks its highest price point in over a year. Notably, on May 3, trading volume hit a record high, with over 29 million shares changing hands, and foreign investors acquired a record-breaking VND545 billion worth of shares.
In contrast, the real estate sector has reported a record decline in profits, and stock prices have followed suit. NVL, for example, reported a loss of VND600 billion in the first quarter, its largest quarterly loss on record, compared to a loss of VND410 billion in the same period last year. NVL’s stock price has dropped by 26% since the beginning of April.
DIG’s stock has similarly declined by 24% after the company announced a record loss of VND121.23 billion in the first quarter of 2024.
STILL, MANY STOCKS NEGLECTED BY PROFITS
At present, business profits exert the greatest influence on the market. However, not all stocks appreciate based solely on a company’s fundamental improvements. Some stocks remain unaffected by profit gains, as evidenced by CTD and LAS.
Coteccons (CTD) recently released its consolidated financial report for the third quarter of fiscal year 2024, covering January 1 – March 30, 2024. Revenue reached almost VND4,666 billion, a 49% increase year-on-year, largely due to construction contract revenue of approximately VND4,659 billion, an increase of 150% compared to the same period last year.
After deducting various expenses, Coteccons achieved a net profit of nearly VND105 billion, 4.75 times higher than the corresponding period last year. After 14 quarters, CTD has once again attained a quarterly profit in the hundred-billion-dong range. Notably, Coteccons’ robust growth has outpaced its revised targets, with the construction giant achieving 72% of its revenue goal and 81-84% of its post-tax profit target within nine months. This is a rare accomplishment for CTD.
Despite this strong performance, the company’s stock price has remained largely unchanged, failing to reflect its growth potential.
In a recent report, at least three brokerage firms recommended buying CTG with a target price of VND76,000 – VND80,000 per share.
Supper Phos Phát và Hóa chất Lâm Thao (LAS) is another significant example. The company recently announced its first-quarter 2024 financial statement, indicating net profit for the quarter reached VND52.4 billion, a 58% increase compared to the same period in 2023.
The fertilizer group is expected to benefit significantly from the Draft Law on Value Added Tax (amendment). Recently, the government directed the Ministry of Finance to finalize the Draft Law on Value Added Tax (amendment) and submit it to the Prime Minister before presenting it to the National Assembly in the upcoming May-June session.
By excluding fertilizers from the list of items exempt from value-added tax and classifying them as subject to 5% tax, the Ministry of Finance has fulfilled a request made by the industry for over a decade. Once this 5% tax is implemented, allowing for the deduction of input costs, corporate profits will significantly recover compared to the previous period.
However, similar to DCM and DPM, LAS’s stock price has not shown any meaningful movement and has even declined sharply since the official announcement of its first-quarter 2024 profits.
“The market will eventually reflect the fundamentals of companies and the true state of the economy; therefore, stocks with strong financial performance and positive industry outlook will eventually attract the attention of investors,” said an independent financial advisor.
However, the advisor believes that the overall positive trend is that the market is moving in the right direction. Stock prices on the exchange generally still reflect the intrinsic value of the underlying companies compared to previous periods. This serves as a solid foundation for the long-term growth of the market.
