Agriseco Research's analysis team believes that a strategy of buying stocks with high dividends, sound finances, and industries less affected by economic cycles is appropriate in the context of a sharp decline in the VN-Index and low deposit interest rates.
In an analysis report published on April 19th, the analysis team of Agribank Securities Company (Agriseco Research) stated that the VN-Index has fallen nearly 10% since its short-term peak, despite the release of strong Q1 business results. This suggests that the market's valuation level is becoming more attractive.
"With deposit interest rates currently very low (according to major commercial banks, one-year deposit interest rates are fluctuating between 4.3% and 4.9%), the appropriate strategy at present is to buy good stocks at reasonable prices to receive cash dividends and benefit from future price increases," Agriseco Research's report states.
According to this analysis group, the three criteria investors should consider when choosing stocks during this period are regular cash dividends, a healthy financial situation, and the company operating in a highly stable sector.
Agriseco Research proposes six stocks in descending order of priority: VEA, SMB, GHC, SED, DHA, and PAT.
Specifically, VEA, a subsidiary of Vietnam Engine and Agricultural Machinery Corporation, is assessed by this analysis group as having abundant cash reserves, evidenced by deposits accounting for 48% of total assets. "Thanks to stable business cash flow, VEA has paid attractive cash dividends, ranging from 40-100% over the past three years," the report states.
On the stock exchange, VEA closed the week's trading session at 35,800 VND, down 0.8% from the reference price. With over 1.32 billion shares listed on the UPCoM market, the company's market capitalization is 47,570 billion VND.
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| The graph compares the market prices of 6 stocks in the portfolio proposed by Agriseco Research. |
SMB shares of Saigon Beer - Central Vietnam Joint Stock Company were ranked second on Agriseco's list of preferred stocks. The company is considered to have a safe capital structure due to its low debt ratio. SMB's planned cash dividend payout this year is 35%, equivalent to a dividend yield of 9.4% per year. The analysis team believes this yield is very attractive given the current one-year bank deposit interest rates, which only range from 4.3-4.9% per year.
Another stock trading on the UPCoM exchange included in this list is GHC of Gia Lai Hydropower Joint Stock Company. According to Agriseco, last year, GHC's dividend yield was 8.7%, and with a planned cash dividend payout of 25%, this year's yield is also 8.7%, nearly double the bank deposit interest rate.
On the stock exchange, GHC is trading at around 28,500 VND, down 1.4% from the reference price at the end of last week and down about 4% from the one-year peak set in the middle of this month. Average trading volume is 23,000 units per session.
One representative of the Hanoi Stock Exchange included in Agriseco Research's suggested portfolio is SED of Phuong Nam Education Investment and Development Joint Stock Company. SED's dividend yield last year was 7.7% and is expected to remain stable this year. Furthermore, the company maintains a healthy financial position and has a better ability to meet short-term debt obligations.
The remaining two stocks in Agriseco Research's suggested portfolio are DHA of Hoa An Chemical Joint Stock Company and PAT of Vietnam Apatite Phosphorus Joint Stock Company, with expected dividend yields for this year of 7% and 7.5%, respectively.
Both companies share the commonality of maintaining attractive dividend yields over the years and possessing sound financial structures. DHA is currently experiencing significant price volatility, falling from around 52,500 VND at the beginning of February to 42,100 VND currently. Similarly, PAT's share price has also dropped sharply from around 102,000 VND to 90,000 VND after the last trading session of the week.
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