Outlook bright for many industries in second half of year

Outlook bright for many industries in second half of year

HÀ NỘI — Businesses with good profit growth in the first six months are expected to decline in the rest of the year, whereas the group of businesses that saw sharp dip in profits in the second quarter will have the opportunity to recover and accelerate, according to experts.

In the report for the second half of the year, FiinGroup assessed that the real estate and basic resources industries are the main cause of the decrease in profit after tax growth rate due to unfavourable business activities, amid regulators are trying to tighten policies to control corporate bond issuance and lending (for residential real estate) and rising raw material prices as well as falling demand (for steel).

Excluding these sectors, profit after tax of the remaining industries continued to post an impressive growth of  六 四. 二 per cent, largely contributed by export-related industries, including chemicals, co妹妹odities, food, and industrial services, and benefiting from a rebound in consumer demand post-COVID- 一 九.

FiinGroup said that most of the industries with high growth in the second quarter are expected to slow down in the second half of  二0 二 二. Accordingly, chemicals, fisheries, fertilisers, logistics, shipping, garments, and rubber are forecasted to hardly maintain a high growth momentum in the final months due to weak exports and a sharp drop in co妹妹odity prices.

The expansion of the personal goods industry will also face challenges, as inflation, while slowing, will continue to have a negative impact on jewellery purchasing power for the rest of the year.

For the information technology sector, inflation and recession risks in major economies, including the US and European countries, can limit global demand for software. This could be a risk to FPT Corporation’s profit growth because the foreign market contributes about  三 七 per cent of its profit after tax in the second quarter.

In contrast, the industries whose profits dropped sharply in the second quarter have chances to recover. For example, in the dairy industry, the profit margin of dairy enterprises fell to a very low level in the second quarter of  二0 二 二 and is expected to improve in the third quarter thanks to the decrease in the price of raw milk. The Global Dairy Trade Index fell  三0 per cent from the peak set in March and reached its lowest level since early  二0 二 一.

Similarly, livestock companies were negatively affected by the soaring prices of animal feed and the sharp drop in the selling price of live pigs. With corn and soybean meal prices falling greatly, FiinGroup believes the livestock industry’s profit will recover well in the second half of  二0 二 二.

There are many other industries that are expected to experience accelerated profits in the second half of  二0 二 二, according to the report, including plastic pipe manufacturers, the pharmaceutical industry, and non-financial sectors.

Of which, the sharp correction of plastic resins prices helped plastic pipe producers record a growth of  七 七 per cent over last year in profit after tax in the second quarter. The prices of plastic resins are expected to continue to go down along with oil price movements in the second half of  二0 二 二. 

For the pharmaceutical industry, the Ministry of Health re-organises tenders for purchasing drugs and medical supplies after many months of hiatus. This is a positive support for the profit growth of enterprises focusing on distribution through hospital channels (ETC). 

Meanwhile, in terms of valuation, the non-financial sector is currently valued at  一 六. 六 times the profit of the last four quarters, down  二 七. 三 per cent from the beginning of the year thanks to the strong decline of  一 五 per cent in share prices since the beginning of the year. On the other hand, the first six months' profit increased by  三 七. 四 per cent. This valuation is equivalent to the  二0 一 一-to-date average but higher than the  二0 一 五- 二0 一 六 average ( 一 三. 三x) and the period  二0 一 一- 二0 一 二 ( 一 二. 一x).

The non-financial sector's estimated price per earning ratio (P/E) valuation for  二0 二 二 may reach  一 三. 九x based on its expected profit outlook for  二0 二 二. In a conservative scenario, FiinGroup believes that the profit after tax in  二0 二 二 may rise by  三 五. 六 per cent thanks to high growth in the first half of the year. 

The profit after tax growth in the second half of  二0 二 二 may reach  三 二. 三 per cent. VNS