With the prospect of after-tax profit growth in the second half of 2024 above 20% thanks to the continued recovery trend in the Non-Financial group, P/E will be lower when the market adjusts, creating opportunities in industries/stocks with room to expand in valuation and good growth prospects.
Q2/2024 business results season
The Q2/2024 business results season officially ended with the total profit after tax of the whole market increasing by 26% over the same period with the growth momentum from the Non-financial group increasing by 32.9% thanks to significant contributions from groups with recovery stories including Steel, Aviation, Telecommunications, Fertilizer, Retail and Real Estate, largely thanks to project wholesale and recording income from financial activities.
In the Finance group, profit after tax increased by 20.6% over the same period. Banking continued to be the main growth pillar, increasing by 21.6% over the same period and 6% quarterly, while Securities no longer had a sudden growth because the low comparison base effect had ended.
According to FiinGroup, the growth prospect of after-tax profit will continue to be positive in Q3/2024 thanks to the comparison of Q3/2023 being the bottom level in the past 6 quarters.
This is also the quarter in which two key industries including Banking and Real Estate both had poor business results and the profits of the remaining groups except Steel, Securities, and Oil and Gas have barely recovered or recovered very slowly.
The recovery trend is ongoing.
The recovery trend is taking place quite positively in many industries in the Non-Financial group; Profit level is stable in the Financial group.
Specifically, the consumer goods group achieved outstanding growth in after-tax profit compared to the same period thanks to revenue growth and improved EBIT margin, led by MWG and FRT Retail.
Meanwhile, Milk (VNM), Beverages (SAB), Food (MSN), Personal Goods (PNJ) recorded growth rates lower than the average of the Non-Financial group, but these are still business results exceeding expectations.
With consumer demand expected to recover more strongly and profit margins remaining expanded (thanks to good control of input costs), the growth outlook for the second half of 2024 remains quite positive for most of these industries (except for Personal Goods as gold prices are unlikely to spike in the near future).
Regarding the prospects of the Sugar and Livestock industries, according to FiinGroup, there are no significant supporting factors for profit growth in the second half of 2024.
In the export group, many signals show that consumer demand in Vietnam's main export markets, including the EU and the US, is weakening. Therefore, the growth of after-tax profits of the Export group will continue to be strongly differentiated in the coming quarters.
Most textile stocks are at high valuations compared to the 3-year average. Profit growth has not met expectations, causing many textile stocks to be under adjustment pressure in the past month.
With recovery prospects still ahead, this is a notable group of stocks with lower valuation discounts.
With Rubber, the growth momentum may slow down because rubber prices do not increase as dramatically as at the beginning of the year.
In terms of valuation, the P/E of the entire market is currently at 13.3x, below the average from 2019 to present (14.8x) and down 12.5% compared to the 2-year peak (set in early April 2024). Of which, the P/E of Non-Financial decreased by 11.5% and that of Banking decreased by 14.3%.
With the prospect of after-tax profit growth in the second half of 2024 above 20% thanks to the continued recovery trend in the Non-Financial group, P/E will be lower when the market adjusts, creating opportunities in industries/stocks with room to expand in valuation and good growth prospects.
Source: VnEconomy
