Growing ‘stars in the midst of difficulties

Hoa Sen Group always has to seek innovation and investment breakthroughs, improve production capacity and product quality in order to win and maintain market share Photo: S.T

Shining during the pandemic

The biggest impact of the Covid-19 pandemic on the global economy is the disruption of commodity supply chains. A series of problems arise such as lack of empty containers, congestion at ports, continuous escalation of freight rates, has afflicted a series of import and export enterprises. In that context, the business results of many shipping companies suddenly "brightened" after many years of turbulence.

Typically, Vietnam Shipping Joint Stock Company (Vosco) has reversed spectacularly with a profit after tax of nearly VND409 billion in the first nine months of 2021, much better than a loss of VND139 billion year on year. As a result, the accumulated loss of this enterprise decreased sharply from more than VND909 billion at the beginning of the year to only VND502 billion.

This also brought Hai An Transport and Handling Joint Stock Company VND284 billion in net profit in the first nine months of 2021, an increase of more than 200% compared to the same period last year and exceeding 80% of the whole year plan.

It is forecast that the business results of shipping companies will continue to be positive in the fourth quarter of 2021 when production activities resume and transport demand rises after the social distancing period.

In the manufacturing sector, the disruption of the supply chain has caused the price of a series of raw materials to skyrocket. Thanks to the hoarding of input materials, many businesses benefited greatly from this wave of price increases. Typically, in the steel industry, Hoa Phat Group Joint Stock Company expects the export volume of finished construction steel in 2021 to exceed 1 million tons, double that of 2020. In the past nine months, the company's after-tax profit reached a record level of over VND27,000 billion, an increase of more than 200% over the same period last year.

Similarly, the gross profit margin of Hoa Sen Group Joint Stock Company in the fiscal year 2020-2021 has improved to 18.2% thanks to high steel prices and sales in markets with good margins. Accordingly, Hoa Sen's profit after tax reached nearly VND4,313 billion, an increase of 274% over the same period last year and a record high profit after 20 years of operation.

Hoa Sen's export volume is increasing strongly in both traditional markets and newly exploited markets, especially those with high demand for coated steel sheets such as North America and Europe. This enterprise is expected to increase the proportion of exports in these two markets from 20-30% to more than 50%.

Chemicals is also brightening with business results skyrocketing in 2021 thanks to high selling prices. At the extraordinary shareholder meeting held in early December 2021, Mr. Dao Huu Huyen, Chairman of Duc Giang Chemical Group Joint Stock Company, said that this year the company is expected to achieve a record net profit of up to VND2,400 billion, 2.5 times higher than the results achieved in 2020. According to statistics in the chemical and fertilizer industry, up to 11 enterprises have exceeded the whole year plan after only nine months of operation.

In the financial services sector, the sublimation of the stock market and the wave of new investors have brought about multi-fold growth for a number of securities companies. Many securities companies also adjusted their profit plan to be much higher than the initial target.

Typically, Agriseco Securities Company adjusted its business plan with a new profit target nearly 3 times higher than the previously set target; VNDirect Securities Company also doubled its profit target; SmartInvest Securities even raised its pre-tax profit target to VND200 billion, 42 times higher than the previously set target of VND4.8 billion.

What is the outlook for 2022?

Forecasting the outlook for 2022, analysts say that the general macroeconomic environment is expected to improve from post-pandemic transitions through wide-ranging structural reforms, as well as loose fiscal support and monetary policy. Widespread vaccine coverage, coupled with increased adaptation to the COVID-19 strategy, will help the economy recover on a large scale in 2022.

According to Ms. Tran Khanh Hien, the reopening process of the economy will be accelerated from the first quarter of 2022. Accordingly, the service industry will recover and achieve a higher growth rate from 2022 with the main driving force coming from the reopening of non-essential services and the recovery of domestic demand.

Along with that, export activities will maintain positive momentum thanks to the recovery of global demand. According to the WTO, global trade volume is expected to grow by 4.7% in 2022, higher than the 4% forecast in the previous report and may return to pre-pandemic levels by the end of 2022. FTAs such as the CPTPP that will take effect from the beginning of 2022, together with the reduction of tax rates under the EVFTA, will boost Vietnam's exports. Therefore, Ms. Hien forecasts that export turnover will increase by 12.5% ​​in 2022 and continue to be the main growth engine for the economy.

Notably, shipping costs are expected to gradually normalize from the end of 2021 are minimized thanks to Covid-19 prevention measures such as high vaccination rates as well as reducing container shortages after more orders are placed. Container manufacturing orders have increased sharply since mid-2021. Several key freight indices have begun to decline since October 2021, including the Baltic Dry Cargo Index and the Air Freight Index by container (export) Shanghai. Cooling transport costs will create favorable conditions for Vietnamese enterprises to boost exports in 2022, especially to the US and European markets.

Experts from Mirae Asset Securities also said that the financial services, real estate, banking, software and service industries will continue to maintain high growth momentum in 2022. Meanwhile, materials, oil and gas, insurance and utilities industries will have a significantly lower growth compared to 2021. Industries facing many difficulties in 2021 such as transportation, basic construction, apparel and equipment power, food and beverage, autos and parts are forecast to recover when the economy fully bounces back.