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

The fertiliser, retail, livestock, banking and logistics sectors are expected to witness significant profit growth in the third quarter (Q3), ranging from 22% to an impressive 1,620%, 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 950 billion VND (38.39 million USD) in Q3 and 3.2 trillion VND in the first nine months of 2024, reflecting a remarkable 1,620% and 243% 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.

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 1.8 trillion VND in Q3 and 5.4 trillion VND in the first nine months of the year, representing substantial increments of 178% and 321% 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 520 billion VND in Q3 and 1.5 trillion VND in the first nine months, up 28% and 75%, respectively. The growth is linked to lower feed prices.

Pork is now trading at a price of 65,000 - 70,000 VND per kg, a 30% 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.

In the banking sector, Agriseco foresees a 24% profit surge in the third quarter of 2024, hitting 74.1 trillion VND — momentum that was sustained from the previous year. Cumulatively, profits for this sector are estimated at 222.2 trillion VND for the first nine months, up 19% year-on-year.

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

Meanwhile, anticipated improvements in net interest margin (NIM) exceeding 3.7% 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%, Group 2 debts (or debts needing special attention) are gradually lowering from 2.1% to 1.8% 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% to 8.1 trillion VND in Q3 this year, showing a robust growth trend compared to the previous year. Agriseco's analysis further predicts a total profit of 24.4 trillion VND for the first nine months, up 18%.

These forecasts are underpinned by Vietnam’s escalating import-export value, up by 17% to 511 billion USD in the first eight months of 2024. Seaport cargo traffic in the country has surged by nearly 20%, 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./.