BSC Vietnam Sector Outlook 3Q2024_EN

Dear Investors,

In the first half of 2024, the entire market recorded a post-tax profit growth rate of 20%, led by the non-financial sector with a +34% YoY increase, which is in line with BSC's previous projections. This marks the third consecutive quarter of positive growth compared to the period from Q4 2022 to Q3 2024, signaling a confirmed recovery trend for the economy.

Moving into the second half of 2024, BSC has slightly lowered its 2024 BSC-Universe growth forecast from 17% to 16.5%, primarily due to (1) the downward revisions for the banking, industrial zone, construction, chemical-fertilizer, and seafood sectors, while upward adjustments were made for the retail, building materials, textile, and F&B sectors. BSC assesses that with the expected easing of exchange rate pressures as the Fed begins cutting interest rates, profit growth in 2H.2024 will continue to be supported mainly by reduced borrowing costs, lower foreign exchange losses, reduced selling and administrative expenses, along with a low base effect from Q3 2023. As a result, the risk of lower-than-expected profit growth forecasts like in Q3 2023 will be minimized.

Regarding risks that could affect our valuation, BSC observes several factors that could create headwinds for the economy's recovery, including: (1) Vietnam's PMI recovery is lagging behind the world, while the PMIs of many countries globally have been declining since May 2024, reflecting a weakening global economy; (2) Export growth in China and several major countries is slowing; (3) The pace of the Fed's interest rate cuts (Page 15).

At a trailing PE = 13.4 times and a trailing PB = 1.5 times, after updating Q2/2024 earnings results and the market's strong correction in early Q3/2024, the VN-Index is trading at an attractive valuation level compared to its historical range, only about 5%-6% higher than the historical lows of Q2/2020, Q4/2022, and Q4/2023. Coupled with the economy’s recovery and corporate profit growth, BSC believes that corrections present a good opportunity to accumulate stocks for the medium and long term.

Following the previous Vietnam Sector Outlook report, BSC is pleased to present to investors the Vietnam Sector Outlook for Q3.2024. BSC continues to maintain a positive 2025 outlook for sectors such as Information Technology, Industrial Zones, Seafood, Retail F&B, Building Materials, Textiles, Utilities, Banking, Chemicals – Fertilizers, Oil & Gas, and Shipping, based on the assessment of 2025 profit growth with the criterion of post-tax profit growth >15%. Our stock selection focuses on the following key factors: (1) Leading companies with strong competitive advantages, benefiting from the recovery cycle, (2) Companies with unique growth stories such as increased capacity, improved profit margins, or benefits from new policies, (3) Companies with strong financial foundations, and (4) Companies currently at attractive valuations for the medium to long term.

BSC wishes investors a year of wise, fortunate, and successful investments!