Investors advised to hold stocks of leading firms with good Q3 outcome: broker

Investors should buy stocks of leading companies that have appropriate valuations and show positive business performance in the third quarter and throughout 2024, according to broker Agriseco.

In the banking group, the broker mentioned BID of BIDV on the Ho Chi Minh Stock Exchange (HoSE), saying that the State Bank of Vietnam (SBV) has approved a credit growth limit of 14% for BIDV in 2024.

As of June 30, 2024, its credit growth had reached 5.9% compared to the beginning of 2023. Agriseco expects that the bank’s credit room by the year-end remains large, estimated at 8%, and it will enhance disbursement in the last months of the year to use its entire credit quota, with a focus on increasing the retail segment which accounts for 45% of its loans.

Additionally, the bank will benefit from public investment promotion to accelerate economic recovery. In the medium to long term, its focus on developing retail banking is expected to support an improvement in the net interest margin (NIM).

For the last six months of 2024, Agriseco estimates that the bank’s NIM could recover to 2.7% based on strong demand for credit and low funding costs.

Moreover, Agriseco assesses that BIDV has stable asset quality with a substantial provisioning buffer. Its asset quality is expected to continue improving in the second half of 2024 due to the economy gradually warming up with recovered production activities and rising year-end consumer demand.

The ratio of debts in group 2 (debts needing attention) to total outstanding loans decreased in Q2, which will ease pressure on increasing bad debts in the latter half.

For VPBank (HoSE: VPB), Agriseco says that its pre-tax profit in Q3/2024 is forecast to recover significantly compared to the low base in the same period last year, as the bank continues to step up lending in the final months of the year. Its net interest income is expected to be the main driver supporting operational income growth.

The firm assesses that the recent trend of rising deposit interest rates has not significantly impacted the NIM, while the CASA (current account and savings account) ratio shows signs of recovery, reinforcing the potential for expanding the NIM in the second half of this year.

The non-performing loan (NPL) ratio of VPBank in 2024 is also projected to decrease compared to 2023, thanks to low interest rates, signs of recovery in the real estate market, and a loan portfolio restructuring policy focusing on higher-quality customers, which will help reduce bad debts.

Additionally, with a capital adequacy ratio (CAR) of 15% at the end of Q2, VPB has significant room to grow earning assets while maintaining a policy of cash dividend payments in the coming years.

In the livestock group, Agriseco believes that Dabaco Group (HoSE: DBC) will benefit from the strong increase in pork prices. The significant decrease in the prices of animal feeds such as wheat, corn, and grains also helps Dabaco reduce input costs.

At the same time, the company will benefit from livestock regulations, increasing its market share from smallholder farms. Dabaco has invested in large-scale livestock farm projects to increase total capacity by approximately 25%.

Notably, it is constructing a vaccine production plant with a capacity of 200 million doses per year. The company plans to finalize testing and GMP assessment toward commercialization in the upcoming phase. This is expected to be a segment that brings high profit margins for Dabaco.

Among steel stocks, Agriseco anticipates that business results of Nam Kim Steel JSC (HoSE: NKG) will grow steadily in the last months of the year as the main export markets, Europe and North America, continue to expand, along with a more active domestic construction market.

Additionally, the broker expects temporary anti-dumping measures to be implemented around the end of 2024 will help improve Nam Kim’s domestic production.

This steel company also benefits from low-cost inventory in Q3, while rising prices of Chinese steel reduce competitive pressure for exporters in general.

The outlook for business results is also expected to improve for petrol retailer Petrolimex (HoSE: PLX). Agriseco believes that this firm will benefit from the recovery of industrial production in the country, which will boost gasoline and oil consumption as demand for goods transportation increases.

The rapidly growing middle class is predicted to enhance the shift from motorcycles to cars, stimulating stronger fuel consumption.

Regarding the draft new decree on gasoline trading, as a leading distributor, Petrolimex may gain advantages in negotiating with partners to obtain the best input prices, thereby building a competitive fuel pricing system compared to the average price, increasing its share in the domestic market, and improving revenue.

The implementation of expressway projects and airport systems requires a large demand for asphalt, which is expected to help increase asphalt sales, thus improving revenue for Petrolimex.

Vietnam’s benchmark VN-Index experienced a lackluster performance in the first days of September. However, it rebounded well during the last trading weeks, closing the month at 1,287.9 points, up 0.32% from the previous month.

The banking sector continued to be a magnet to capital flows and led the market amid that uptrend.

Foreign investors returned to net buying Vietnamese stocks in recent weeks amidst the U.S. Federal Reserve’s (Fed) interest rate cuts and China's recent economic stimulus package.

The VN-Index fell 0.59% to 1,270.60 points on Friday, with trading value on the HoSE dropping by 41% to VND13.734 trillion ($554.4 million).