2Q22 earnings growth takes a breather

2Q22 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) grew modestly by 13.5% yo, according to VNDirect's estimates.

Mixed performance

Based on VNDirect’s estimates, 2Q22 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) grew modestly by 13.5% yoy, slower than that of 1Q22 (36.7% yoy) and 2Q21 (72.8% yoy). For 1H22, market earnings grew 24.2% yoy; tracking inline with VNDirect’s forecast of 23% yoy for FY22F. Out of the 58 companies under this stock company’s coverage that have reported their 1H22 results, 48.3% were in line with its expectations, 15.5% beat its forecasts, and 36.2% missed its estimates.

Banks’ earnings rose 39.8% yoy in 2Q22, higher than in 1Q22 (31.7% yoy) and 2Q21 (34.3% yoy). VNDirect observed that provision expenses tend to be subdued at 17% yoy in 2Q22 while the average non-performing loan (NPL) ratio increased 13 pbs yoy to 1.56% in 2Q22. Oil & Gas posted the most impressive earnings growth with 172.6% yoy following the oil price spike, mostly driven by BSR (488 % yoy). Meanwhile, the chemicals sector’s net profit was elevated by 139% yoy, lower than that of 193% yoy in 1Q22 as fertilizer and phosphorus prices have peaked. Together, banks, oil & gas, and chemicals contributed 21.1% to the market’s 2Q22 NP growth.

Notably, Travel & Leisure narrowed their loss to VND2,212 billion (60% vs 1Q22), thanks to a boom in domestic travel and the resume of international flights.

Utilities’ net profit rose 88.7% yoy in 2Q22, even stronger than the previous two quarters, mainly driven by GAS (124.9% yoy). Industrial transportation’s (ports and logistics) earnings delivered 116.6% yoy in 2Q22, much higher than that of 33.1% yoy in 1Q22, mainly driven by ACV (666.8% yoy) and MVN (192.6% yoy).

Following the gross margin compression, steel manufacturers reported a sharp drop of 67.0% yoy in 2Q22’s earnings growth, dragging the market’s earnings growth by 8.6%. Property developers experienced negative earnings growth of 35.8% for the third quarter in a row. However, if we excluded VHM, the net profit of the property developer would grow by 52.7% yoy in 2Q22. Earnings of securities firms declined deeply by 93.5% yoy in 2Q22, following the contraction in both indexes and market liquidity.

Mid, small and large caps’ earnings growth

2Q22 net profit of VN30 weakened 2.5% yoy, mostly dragged down by VHM (-95% yoy) and HPG (-59% yoy). Large caps still had a strong footprint in 2Q22 with 24.1% yoy earnings growth, driven by some notable names: BSR (488% yoy), ACV (667% yoy), SHB (72% yoy), KBC (4,535% yoy), DGC (455% yoy), …

Mid and small-cap enterprises have started to feel the heat of increasing expenses and gross margin compression. Midcap earnings dropped 25.4% yoy, while small-cap inched up only 3.6% yoy in 2Q22. VN30’s earnings dipped 2.5% yoy in 2Q22. 18 corporates out of VN30 delivered positive growth, led by GAS (125% yoy), VIC (120% yoy), and CTG (106% yoy). VIC recorded a one-off profit in financial income. The robust performance of CTG was mainly due to softer provisioning expenses. Notably, VJC posted positive earnings of VND190.1bn in 2Q22 (-VND0.3bn in 2Q21).

On the other hand, the laggards are named VHM (-95% yoy), HPG (-59% yoy), and POW (-51% yoy). VHM's 2Q22 NP dropped sharply by 95.2% yoy due to low property handover (-91.3% yoy in handover value) and a high-base effect from bulk sales at Vinhomes Ocean Park and Vinhomes Grand Park in 2Q21. The steel price drop and material input price hike weighed on HPG’s bottom line.

Among banks, only VPB and STB recorded negative earnings growth of 12.7% and 27.8% yoy, respectively. POW posted negative earnings growth due to the high base in 2Q21. Among VN30, only PLX recorded a loss of VND196bn as the company booked a provision for inventory re-valuation of more than VND1,100bn.