Vietnamese stocks are valued at the lowest level in 10 years, 'extremely unreasonable'?

Ms. Nguyen Hoai Thu shared within the framework of the 2024 investor conference taking place on October 8.

Since the beginning of the year, the VN-Index has been fluctuating, with more than 5 attempts to surpass the 1,300 point threshold but all failed.

This development also challenges the patience of many investors. Currently, VN-Index is anchored at 1,271.98 points.

Low stock valuations, but corporate earnings quality has improved significantly

Sharing her perspective on the Vietnamese stock market, Ms. Nguyen Hoai Thu, CEO of VinaCapital Securities Investment, cited many notable data.

Accordingly, the P/E (market price to earnings) valuation level of Vietnamese stocks is projected to be 10x in 2025. The stock price to book value (P/B) is also very low. "This is extremely unreasonable," said Ms. Thu.

Compared to regional rivals such as Indonesia, Malaysia, the Philippines and Thailand, Vietnam's stock market valuation is the lowest. At the same time, it is lower than the average level in the past decade, even lower than the COVID-19 period.

Notably, in that context, core profits of listed enterprises are forecast to increase steadily.

Last year was negative 0.2% due to the impact of the corporate bond and real estate crisis, but 2024 - 2025 - 2026 is forecast to increase approximately 11.5%, 23.2% and 20%.

The above profit level increased remarkably, higher than China, India, Thailand, Philippines, Malaysia, the average of ASEAN and Indonesia.

If last year some industry groups had negative profit growth, this year all increased from 12 - 105% or more, including: industrial parks, aviation, utilities, healthcare, insurance, oil and gas, banking, technology, ports and logistics, securities, consumption, construction materials, real estate.

Even the quality of earnings has improved significantly. Return on equity (ROE) is forecast at 14% this year and 15.6% next year and 16.5% respectively.

More positive than the COVID-19 and corporate bond crises, returning to pre-pandemic levels.

Compared to other markets in Asia, the above ROE of Vietnamese enterprises is quite good. It is only behind India, higher than Taiwan, Indonesia, Philippines, Singapore, Hong Kong (China), Korea, China, Malaysia and Japan.

At the same time, net debt/equity (of non-financial groups) is at a safe threshold and lower than 10 years ago. Asset quality of banks has improved somewhat.

Positive macro growth, cautious with potential risks

For stock investors, assessing the macroeconomic situation is one of the important points, from which to develop appropriate strategies. Experts from VinaCapital investment fund forecast positive prospects for Vietnam's macro economy.

Specifically, GDP is forecast to grow by 6.5% this year. The next driving force is the stable USD - VND exchange rate, not fluctuating more than 2%/year. Inflation is well controlled below 4% due to the decrease in oil and food prices.

The real estate market also gradually recovered, with transaction value increasing by 30% year-on-year in the first three quarters of 2024. Monetary policy is loose, with interest rates at a record low of 5% per year.

Not to mention the sharp increase in tourists to Vietnam in the past 5 years, thanks to the number of visitors from Korea, Taiwan and China.

In addition, many policies have also been improved, promoting growth. Typically, through the Law on Credit Institutions (increasing the transparency of the system, better synchronization with the Law on Real Estate Business and the Land Law).

Or removing the 100% margin requirement before trading, moving towards establishing a Central Clearing System (CCP), improving market access for foreign investors and promoting upgrading the stock market...

Although foreign investors have sold a net more than 2.6 billion USD since the beginning of the year, this is a general trend worldwide .

Foreign investors have withdrawn from many markets and moved back to the US when deposit interest rates reached 5.5%/year, which is safer. However, in the long term, foreign investors are still paying attention and waiting for opportunities to re-enter Vietnamese stocks.

Besides the advantages, stock experts said investors also need to pay attention to some potential risks from outside.

The most prominent is the slowing of the US economic growth. China exports a lot of goods, sells them cheaply in the world market, putting pressure on Vietnam. At the same time, there are geopolitical risks.

Domestic risks include weak domestic consumption, while the real estate market is expected to recover but further observation is needed.

Higher inflation could impact monetary policy. Delays in upgrading Vietnam’s stock market could disappoint investors.

According to records, while the stock market is full of fluctuations, besides investors who suffered heavy losses, there are still many people who made big profits, especially the "sharks" operating open-end funds, achieving profits of more than 34% in the first three quarters of 2024, higher than the increase of VN-Index.

Source: https://tuoitre.vn/chung-khoan-viet-bi-dinh-gia-thap-nhat-10-nam-cuc-ky-vo-ly-20241008190951145.htm