Vietnamese businesses positive about 2024 prospects

Vietnamese businesses in general have shown optimism in making their 2024 plans, citing signs of global economic recovery and belief in the government's policies and efforts to revive the economy.

Pivotal year

Phu Hung Securities, registered on the Unlisted Public Companies Market (UPCoM) as PHS, targets revenues and after-tax profits of VND746 billion ($30.6 million) and VND101 billion ($4.14 million) this year. This is a record revenue level for the firm and the targeted profit is only slightly lower than 2021, the year that the stock market thrived.

The company reported after-tax profits of VND20 billion ($820,430) in the first nine months of 2023.

PHS leaders said 2023 was a challenging year for securities companies not only to maintain operations but also retain investors. They see 2024 as a pivotal year for recovery of the economic cycle, offering an opportunity for the Vietnamese stock market to break out and attract more cash flow.

Besides, the government’s determination to upgrade the market’s status and launch a new trading system provided by the Korea Exchange (KRX) provides the premise for securities firms, including PHS, to diversify products and services for investors.

Strong recovery

Meanwhile, the board of directors at leading contractor Hoa Binh Construction Corporation, listed on the Ho Chi Minh Stock Exchange (HoSE) as HBC, has approved a 2024 business plan that targets revenues of VND10.8 trillion ($443 million) and after-tax profits of VND433 billion ($17.76 million).

If the targets are achieved, it will mark a strong recovery for the firm, compared to a net loss of VND880 billion ($36.1 million) in the first nine months of 2023.

2023 was also a relatively difficult year for construction businesses, particularly cash-strapped ones like Hoa Binh, because the real estate market remained sluggish. High provisions for receivables and financial cost burdens caused big losses for the company in 2022 and 2023.

HBC is currently implementing a financial restructuring plan that involves issuing more than 252 million shares, including 220 million private placement shares and 32.5 million shares for debt swaps.

It has announced that two foreign investors – Tumaz and Tumaz Enterprises and PrimeTech VN Development and Investment – will buy private placement shares. Once the issuance is successful, the foreign partners will own nearly 42% of the company's charter capital and HBC will have trillions of dong (VND1 trillion = $41 million) to repay debts.

Ending the year on a positive note, Hoa Binh on December 27 signed a VND4 trillion ($164 million) design & build (D&B) contract for a social housing project in the northern city of Hai Phong.

25% increase in profit

Doan Nguyen Duc, chairman of Hoang Anh Gia Lai Corporation (HoSE: HAG), said the company is targeting a 25% year-on-year increase in profit this year.

In addition to stable banana production, the firm will see bigger contributions from the pig and durian segments, he added.

Duc predicted pork prices will recover this year, reaching about VND50,000 ($2.1) per kilogram, helping HAGL make a big profit. The company will harvest 300-400 hectares of durians this year 2024.

For 2023, HAGL has estimated a “sudden profit” of VND2.15 trillion ($88.17 million), partly thanks to full payment of VND750 billion ($30.76 million) in principal and interest to Eximbank on schedule, which allowed it to enjoy interest exemption and reduction of around VND1.43 trillion ($58.64 million).

Worst is over

Several experts said that the world and domestic economies are showing signs of recovery. Although the recovery momentum is still weak with many potential risks ahead, the most difficult time has passed, they added.

MBBank Securities (MBS) noted that in 2023, Vietnam's economy showed quarter over quarter improvement, with indicators of production, consumption and export activities all gaining in the last months. As a result, enterprises were able to narrow their decline significantly and expect positive results from the fourth quarter onwards.

MBS analysts identified four economic growth drivers for 2024.

Firstly, Vietnam's exports can increase by 6-7% from a low base in 2023 thanks to the recovery of main markets like the U.S. and China as well as efforts to open new ones, especially for agricultural products.

Secondly, 2024 is considered a pivotal year in implementing the 2021-2025 public investment plan and making plans for the next five years (2026-2030). Therefore, works will be accelerated this year. At the same time, many investment bottlenecks from previous years have been removed in terms of contractor appointments, exploitation of newly licensed quarries and prices of construction materials.

Thirdly, monetary policy is in a more balanced state. Interest rates will tend to bottom out in the fourth quarter of 2024 and maintain a low level throughout the year to support economic growth.

Finally, the VND has strengthened after the U.S Federal Reserve signaled that interest rates had peaked and would soon lower rate hikes. Countries will begin to ease their monetary policies and the USD can depreciate on a large scale, reducing pressures on the domestic exchange rate.

However, the MBS analysts also cautioned that the economy still faces risks related to inflation, a real estate market yet to recover and increasing bank bad debts.

They estimated that profits of listed companies will grow by about 16.8% next year, mainly thanks to recovery of the banking, construction materials, retail and consumer goods industries.