Vietnam aviation stocks take off on surging Q1 profits

Aviation tickers have been among the best performers on the Vietnamese stock market in the year to date after the industry posted year-on-year after-tax profit growth of 1,962.7% in Q1, according to FiinTrade, a stock trading platform designed by financial data provider FiinGroup.

Notably, the market price of ACV of giant Airports Corporation of Vietnam, which exclusively operates 22 civilian airports across Vietnam, has skyrocketed 82% to VND120,900 ($4.75) per share, conquering multiple peaks in the past six months.

National flag carrier Vietnam Airlines (HVN) has also soared 130% to VND28,950 ($1.14) per share, marking its highest price in the past two years.

Share prices of SAS of Southern Airports Services JSC and SCS of SCSC Cargo Service Corporation have also recorded double-digit growth since the beginning of the year.

The capitalization of aviation businesses has increased rapidly as a result of this growth. For example, ACV’s market value has surged by nearly VND120 trillion ($4.82 billion) to surpass the milestone of $10 billion, while. Vietnam Airlines' capitalization has expanded VND37 trillion to more than VND64 trillion ($2.52 billion).

Aviation stocks are "taking off" thanks to the sharp increase in passenger numbers, hitting 22.3 million in Q1, according to data from the General Statistics Office.

The number of international passengers, who bring the largest revenue to the aviation industry, reached 6.3 million in Q1, 1.6 times higher than the same period in 2023. The amount of goods transported by air also increased by 47.5% year-on-year.

Vietnam Airlines recorded a consolidated after-tax profit of VND4.4 trillion ($173 million) thanks to debt write-off. The company had previously reported losses for 12 consecutive quarters.

ACV also announced a record profit of more than VND2.9 trillion ($114 million) in Q1, an increase of 79% over the same period last year.

Private carrier Vietjet (VJC) recorded consolidated revenue and after-tax profit of VND17.8 trillion ($699.9 million) and VND539 billion ($21.2 million), up 38% and 212% year-on-year, respectively.

Even the rookie in the market, Vietravel Airlines also had an after-tax profit of more than VND10 billion ($393,200) for the first time in Q1 after more than three years of operation.

The International Air Transport Association (IATA) forecast that the global aviation market will fully recover by the end of 2024. In particular, the Asia-Pacific market can stop losses and achieve profits of about $1.1 billion in 2024.

According to Yuanta Vietnam Securities, the most difficult period for the aviation industry has passed, partly helping stocks in aviation businesses, including Vietnam Airlines, rally.

The broker points out four factors that are expected to drive aviation stock gains, namely oil prices expected to remain stable; increased demand for tourism and freight transport; higher ceiling levels on domestic air tickets; and the long-term prospects of Long Thanh International Airport in the southern province of Dong Nai.