Listed companies expected to recover in second half of 2023

A worker operating a production line in My Phuoc 3 Industrial Park in Binh Duong province. (Photo: VNA)

The profits of listed companies are expected to recover in the second half of the year after performing poorly in the first quarter, buoyed by the recent supportive policies from the Government, said analysts at securities firms.

In its latest report, Mirae Asset (Vietnam) Securities said that the total after-tax profit of listed companies decreased by 18% year-on-year in the first quarter of 2023. But business results will recover this year, even though not strongly due to the challenges that the economy is facing.

Exports are showing signs of improvement in May on Vietnam’s strong trade promotion, despite persistently weak global demand, the securities firm said.

Data from the General Statistics Office showed that export turnover was estimated at 29.05 billion USD last month, up 4.3% over April but down 5.9% year-on-year.

Mirae Asset expects the recovery from the Chinese market after opening will partly offset the decline from the US market. Thereby, the country’s exports and industrial production activities are expected to be more positive in the second half of the year.

Meanwhile, disbursements of FDI remained stable in the first five months of the year, reaching about 7.65 billion USD.

The analyst team at Mirae Asset believes that Vietnam remains an attractive destination when businesses consider the China plus one strategy, in which companies avoid investing only in China and persify their activities to other nations, as well as when global economic conditions improve.

Similarly, VNDirect Securities Corporation said that the whole market’s profits might recover from the third quarter of 2023 onward.

Accelerating disbursement of public investment, lower interest rates, and the recently passed Power Development Plan 8 are attributed to the rebound in profits of listed companies, said both securities companies.

Mirae Asset said that public investment in infrastructure development and the national Power Development Plan 8 will be important drivers to attract FDI in the long term. At the same time, stable human resources and efforts to reform administrative procedures are also positive points.

Particularly, public investment is a key growth driver in the remaining months of 2023 but disbursement progress needs to accelerate, Mirae Asset added.

In the first quarter of 2023, realised capital from the state budget increased by 18.1% year-on-year to 91.5 trillion VND (nearly 4 billion USD), higher than last year's growth of 12.3%.

Meanwhile, VNDirect said that even though it has reached a sufficient and green option, the Power Development Plan 8 may be more difficult to implement than the adjusted Power Development Plan 7 due to the strong development of high-priced power sources such as gas and renewable energy.

According to the base scenario, the total investment in power is expected to reach 98 billion USD in the period of 2021-2030, or 9.8 billion USD per year, mainly allocated to gas power (30%) and wind power (35%).

Therefore, not only electricity producers but also related construction companies benefit from the plan, Nguyen Minh Hoang, Director of the Analysis Department at VietFirst Securities, told Vietnam News.

In addition, continuous rate cuts from the central bank help reduce enterprises' expenses, especially in the manufacturing, power, and infrastructure construction industries, he added./.