Five sectors see profit growth reaching up to 1,600% in Q3

Workers of PetroVietnam Cà Mau Fertiliser uploading urea on a boat for export. — Photo pvcfc.com.vn

HÀ NỘI - The fertiliser, retail, livestock, banking and logistics sectors are expected to witness significant profit growth in the third quarter (Q3), ranging from 22 per cent to an impressive 1,620 per cent, a recent report has revealed.

In the analytical report, Agribank Securities Joint Stock Company (Agriseco) highlights the diminishing availability of sectors showing high profit growth in the third quarter.

However, experts at the securities firm maintain optimism for five industries: fertilisers, retail, livestock, banking and logistics.

Agriseco said that exports remain a bright spot in the economy, buoyed by positive signals from major trading partners like the US, the European Union and China, with a noticeable uptick in new orders.

The other driver is a persistently low interest rate environment, offering a historic opportunity for reduced borrowing costs. The securities firm predicts a continued downward trend in financial expenses for businesses, supporting profits in Q3 and beyond.

It also underscores the importance of growth in total assets and equity as a factor driving profit expansion. By scaling up, companies can enhance operational capabilities and production capacities to align with the ongoing economic recovery by year-end.

In term of the fertiliser industry, Agriseco experts foresee a robust upsurge in Q3 profits for industry players compared to the low levels of the previous year.

Projections suggest that profits after tax for the group are poised to reach VNĐ950 billion (US$38.39 million) in Q3 and VNĐ3.2 trillion in the first nine months of 2024, reflecting a remarkable 1,620 per cent and 243 per cent surge year-on-year, respectively.

This growth momentum owes much to PetroVietnam Cà Mau Fertiliser JSC, which has concluded its plant depreciation period.

Other fertiliser manufacturers like LAFCHEMCO and DAP - Vinachem stand to benefit from China's curbs on DAP fertiliser exports, paving the way for sustained profitability and substantial growth compared to the prior year.

According to Agriseco, the fertiliser sector's standout feature lies in the current stability of urea prices and production volumes, with expectations of a significant uptick as the year draws to a close with the impending winter crop season.

Urea price movements. Urea futures are traded on the Chicago Board of Trade (CBOT). Source: tradingeconomics.com

As the global fertiliser demand is anticipated to improve with the shift to La Niña weather patterns, it is likely to bolster fertiliser prices' recovery by year-end.

Likewise, the retail segment is poised to maintain a robust growth trend. Projections indicate that the industry's profits after tax are expected to soar to VNĐ1.8 trillion in Q3 and VNĐ5.4 trillion in the first nine months of the year, representing substantial increments of 178 per cent and 321 per cent over last year, respectively.

The retail sector's recovery is driven by factors like a rebound in consumer retail demand supported by policies, consumer spending and tourism. Slowing price competition among retail chains, especially in electronics, will also boost company profit margins.

Individual segments like pharmaceuticals (FPT Digital Retail JSC) and groceries (Mobile World Investment Corporation) also play a role.

For livestock, Agriseco estimates profits to hit VNĐ520 billion in Q3 and VNĐ1.5 trillion in the first nine months, up 28 per cent and 75 per cent, respectively. The growth is linked to lower feed prices.

Pork is now trading at a price of VNĐ65,000 - 70,000 per kg, a 30 per cent increase since the African swine fever outbreak in late 2023 and early 2024. A livestock ban in 2025 will force many breeders to relocate or halt operations.

Pig prices in Việt Nam in the first eight months of the year. — Graphic and data compiled by Ly Ly Cao

In the banking sector, Agriseco foresees a 24 per cent profit surge in the third quarter of 2024, hitting VNĐ74.1 trillion — momentum that was sustained from the previous year. Cumulatively, profits for this sector are estimated at VNĐ222.2 trillion for the first nine months, up 19 per cent year-on-year.

This optimistic outlook hinges on several factors, including sustained credit growth of over 8 per cent for the first nine months, surpassing last year's figures.

Meanwhile, anticipated improvements in net interest margin (NIM) exceeding 3.7 per cent in the upcoming quarter are due to decreasing funding costs outstripping the decline in lending asset yields.

While the industry-wide non-performing loan (NPL) ratio in the second quarter holds steady at 2.2 per cent, Group 2 debts (or debts needing special attention) are gradually lowering from 2.1 per cent to 1.8 per cent since the first quarter.

Notably, Vietinbank, VPBbank and Sacombank stand out as promising stock options for the third quarter.

In the logistics sector, profits are expected to soar by 22 per cent to VNĐ8.1 trillion in Q3 this year, showing a robust growth trend compared to the previous year. Agriseco's analysis further predicts a total profit of VNĐ24.4 trillion for the first nine months, up 18 per cent.

These forecasts are underpinned by Việt Nam's escalating import-export value, up by 17 per cent to $511 billion in the first eight months of 2024. Seaport cargo traffic in the country has surged by nearly 20 per cent, indicating a substantial uptick in demand and a promising sign of economic recovery.

On the global transport front, international freight rates remain on a steep incline. Notably, in the container transport market, fares along key Asia-Europe routes have tripled due to heightened conflicts in the Red Sea since late 2023.

A similar trend is observed in the chemical tanker sector, with transport costs and charter rates soaring due to ongoing political uncertainties.