BSC Vietnam Sector Outlook 2Q2022_EN

Dear Investors,

The market in Q1/2022 is quite similar to the "investment guideline" in the BSC's strategic report when the "Divergence" takes place relatively deeply in many industry groups..

In Q1/2022, the Vietnamese market witnessed many "important events" such as the pressure to raise interest rates of the Fed, the Russo-Ukrainian war, the investigation of some leaders of some large corporations,... However, we still see many bright spots of the strong recovery of the economy dubbed the "new dragon" of Asia. Therefore, we believe that the investment focus in the coming quarters will pivot to the group of underlying stocks with a good foundation, the ability to record profit growth and the divergence between stock groups will be more pronounced as mentioned earlier in the 2022 strategy report. As usual, BSC continues to provide updates on the Q2/2022 market outlook:

1. Vietnam's economic growth forecast remains positive according to which many industry groups continue to benefit from the post-Covid-19 recovery trend. Gdp growth rate Q1/2022 reached 5.03%, higher than the same period in 2021 and 2020 thanks to (1) Expanded production and business activities; (2) Trade agreements and (3) The recovery of domestic and international consumption. Investors can refer to more updates on the macro situation in the March Macro report – The economy gradually recovers, the market is bracing.

2. The Government shall continue to promote the disbursement of public investment. By the end of March, 2021, according to GSO data, the total state budget disbursement capital is estimated at 14.4% of the plan, an increase of 10.6% over the same period. Disbursement of public investment capital is still slow, but the Government has introduced measures to promote the progress of disbursement of public investment capital.

3. The total number of accounts by the end of Q1/2022 has reached 5% of the population compared to 2.8% in Q1/2021. In 2021 and Q1/2022, the presence of securities investment channels is becoming more pronounced for Vietnamese people, the rate of opening new accounts continuously recorded a rapid increase month by month. BSC maintains that the trend will be one of the main investment channels of people in the long term as per capita income improves, which is what has happened to other emerging and developed markets.

4. Last year's water flow had a positive improvement. As of Q3 2021, the trading trend of the foreign sector has maintained a net selling status but recorded a positive improvement with the net selling scale has decreased by 75.2% compared to Q4/2021.BSC expects the trading status of the foreign bloc to continue to move in a more positive direction in the coming quarters based on the outlook for economic growth and profitability. listed businesses go hand in hand with covid-19 post-epidemic recovery.

5. Divestment and equitization activities have not yet taken a positive turn. Accumulated by the end of Q1/2022, corporations and corporations have divested in enterprises with a value of VND 251 billion, earning VND 1,884 billion, of which: The State Capital Investment Corporation (SCIC) has sold capital in 06 enterprises with a book value of VND 69 billion, Earned $475 billion. According to BSC's assessment, divestment activities are still relatively slow compared to the plan, but we expect this activity to "warm up" in the second half of the year, helping the Government increase the state budget capital, support capital for the disbursement of public investment projects in the period of 2023-2025.

6. BSC considers that the market is having intertwined and inverse factors, according to which opportunities and risks always come together. Therefore, 2022 will definitely not be an easy year for investors, BSC found that the number of favorable factors is currently at a balanced level compared to the opposite factor.

After-tax profit growth of BSC enterprises monitored still maintained a positive growth rate of 22%. In the strategy report of early 2022F, BSC outlined two scenarios of profit growth in 2022, up to now, we are inclined to the basic scenario with the average market profit growth in 2022 reaching 22%. BSC rated this as a positive growth based on the high growth rate in 2021 of 47%.

The current market valuation is in relatively attractive territory. With the market recording a sharp correction from the beginning of April, the market's PE trailing is trading at 15.6 times as of April 20, 2022.

Which industry group will be the next leading industry group? Currently, the large-cap sector is only trading at 13.9 times, as of April 23, 2022, while expecting double-digit profit growth, so we expect the market cap group to be the focus for the market in the second half of 2022.

However, the market also faces the "headwind" of (1) Inflation; (2) Pressure to raise interest rates from the Fed; (3) Supply disruptions due to China's Zero Covid policy and (4) The cheap money cycle is over, the possibility of a recession. We think that the "ease" of cash flow in 2021 will be gone, investors will not see the situation of "boating up the water" but the stock market will witness a clear divergence and the ability to choose stocks will be a key factor to the performance of investors. At the heart of cash flow is businesses with good fundamentals that have their own stories accompanied by profit growth factors and healthy financial balance sheets. 

Follow the Vietnam Sector Outlook 2022 report. BSC would like to send to Vietnam Sector Outlook investors Q2/2022. In the Q2 Industry Outlook Report, BSC gave comments to economic sectors with 15 positive assessment groups and 4 neutral assessment groups. 

BSC wishes you a year of wise investment, good luck and success!