According to An Binh Securities Joint Stock Company (ABS), the results of public investment capital disbursement in 2023 create important momentum for localities, ministries and branches to continue to disburse at a high rate in 2024 - the year of acceleration to complete the medium-term public investment plan for the period 2021 - 2025.
Based on the 2024 budget estimate approved by the National Assembly , the Prime Minister issued Decision 1603/2023 on assigning the state budget investment plan for 2024 with a total amount of VND 677,349 billion, equivalent to 95% of the 2023 plan.
Although the total state budget investment capital in 2024 will decrease slightly compared to 2023, in the context of many difficulties in the world economy and the international situation is forecast to continue to develop unpredictably, to achieve the target of disbursing at least 95% of the assigned public investment capital plan, many drastic solutions are needed from all levels, sectors, localities and investors, experts from ABS said.
In fact, the determination of ministries, branches and localities is reflected in the disbursement of public investment capital in the first months of 2024. According to the Ministry of Finance , the estimated disbursement rate of public investment capital in the first two months of the 2024 plan reached 8.7% of the total plan. Compared with the plan assigned by the Prime Minister, the disbursement rate reached 9.13%, an increase over the same period in 2023.
For key projects alone, the total public investment capital plan for 2024 allocated in detail by the Ministry of Transport and localities is over VND 127,593 billion.
Many important traffic projects were constructed throughout the Lunar New Year with the spirit of "overcoming the sun and rain" and "working in three shifts and four shifts" to achieve and exceed the schedule.
Therefore, in 2024, domestic cement consumption is expected to grow thanks to public investment and infrastructure projects and the restart of some large real estate projects after being unstuck, but the increase is unlikely to be a breakthrough. Exports to the Chinese market are unlikely to recover as before, while the growth momentum still depends on the Philippines and Bangladesh markets.
In addition, to limit dependence on China, businesses are expanding to markets such as the US, Australia, South America and Africa.
According to Agribank Securities Joint Stock Company (Agriseco), the construction materials group benefits directly right after the site clearance stage, entering project implementation until the completion of project construction activities.
For the steel industry, enterprises that produce and supply steel for public investment projects and transport infrastructure will benefit from increased demand for steel. For industries where transportation costs have a major impact on the ability to consume products such as cement and construction stone, enterprises with large market shares and locations near ongoing projects will benefit more than the rest of the industry.
Especially for the construction stone industry, currently in many public investment projects (North-South Expressway Phase 2; Bien Hoa - Vung Tau Expressway, Long Thanh Airport) there is a shortage of land for leveling. Therefore, Agriseco expects that leading stone enterprises, owning large stone mines, located near key projects will benefit.
Regarding the improvement in profit margins of construction material enterprises, for steel enterprises, input material prices (iron ore, coke) have decreased sharply since the beginning of the year while steel prices and steel consumption output are expected to recover thanks to public investment disbursement and a thriving real estate market, which will help improve profit margins.
For cement enterprises, business results are expected to remain difficult in 2024, but profit margins will gradually recover from the second half of 2024 above the low base of 2023 thanks to input coal prices forecast to decrease by 24% over the same period (according to the World Bank) and consumption output slightly improved. For the construction stone industry, the expectation that construction stone prices will remain high due to supply shortages will help stabilize gross profit margins.
Experts say that there are many reasons for the decline of the construction materials industry, but one of the main reasons is that the real estate market is not developing, or even declining sharply. However, the impact of real estate on each sector of the construction materials industry is different.
With cement, in addition to being used in construction and real estate projects, this product can be consumed for projects to build traffic infrastructure, roads, bridges, irrigation, and hydropower; at the same time, exporting a part of it is also a temporary solution.
Since the COVID-19 pandemic appeared and then the tension between Russia and Ukraine..., the world economic situation has been unstable, leading to a decrease in consumption demand in general and consumption of construction materials in particular, affecting export activities. Therefore, construction materials enterprises cannot expect exports to be a savior.
The output for the construction materials industry is at a standstill. In the current context, experts say that recovering the domestic market is of “vital importance”. In addition, focusing on removing difficulties for the real estate market and promoting the disbursement of public investment capital is also an important and indispensable solution.
Several large enterprises in the construction materials industry all have a picture of declining business profits in 2023. The reasons given are the decline in the real estate market, difficulties in consumption in the construction materials sector, customers being more cautious in spending, and falling prices...
Hoa Phat Group Joint Stock Company (stock code: HPG) reported business results for the fourth quarter of 2023 reaching VND 34,925 billion, up 33% over the same period in 2023. Profit after tax reached VND 2,969 billion, up 249% over the same period in 2022 and 48% over the previous quarter.
However, cumulative revenue for the whole year of 2023 reached VND 120,355 billion, down 16% over the same period last year. Profit after tax reached VND 6,800 billion, down 19% over 2022, completing 85% of the yearly plan.
Hoa Phat Group recognizes that in the coming time, the market will improve but not clearly because the domestic and foreign economies are still facing many difficulties. The Group prioritizes good management of cash flow, inventory, and production and business in accordance with the market situation. At the same time, closely follow the investment progress of large projects, especially the Dung Quat 2 Iron and Steel Complex, ensuring effective control of the projects.
When Dung Quat 2 project is completed, the Group's steel production capacity will reach more than 14 million tons of crude steel/year, bringing Hoa Phat Group into the Top 30 largest steel enterprises in the world from 2025.
For Viglacera Corporation - JSC (stock code: VGC), in the fourth quarter of 2023, the company had net revenue of VND 3,020 billion, down 8% over the same period, gross profit also decreased by 21% to VND 565 billion.
After tax deduction, Viglacera had a net loss of VND 48 billion (while in the same period in 2022 it made a profit of VND 222 billion). This is the first quarter of loss since the company announced the information.
In 2023, Viglacera reported net revenue of VND13,194 billion, down 10% compared to 2022. The company's pre-tax and after-tax profits were VND1,602 billion and VND1,162 billion, down 30% and 39% compared to 2022.
In the cement industry, Vicem Ha Tien Cement Joint Stock Company (stock code: HT1) is a large enterprise that announced its consolidated financial report for the fourth quarter of 2023 with net revenue from sales and service provision decreasing by 23% compared to the same period last year, down to VND 1,783 billion. Profit after tax reached VND 54 billion, down 6% compared to the same period in 2022.
In 2023, Vicem Ha Tien Cement's net revenue reached more than VND7,000 billion, down 21%. The company reported a profit of only VND17 billion, down more than 93% compared to the level achieved in 2022.
The materials industry has gone through a difficult year in 2023, so the business plans for 2024 set out by businesses are quite cautious.
For example, Vicem Ha Tien Cement aims to produce about 17.03 million tons of clinker in 2024, an increase of 3% compared to 2023.
Total cement and clinker consumption output is about 24.31 million tons, up 7.7%; of which, domestic cement consumption is about 18.57 million tons, up 5.3% compared to 2023, total revenue is about VND 29,814 billion, down 1.2% compared to 2023.
Regarding the steel industry, a representative of Hoa Phat Group said that 2024 will be the starting year of the steel industry after hitting bottom in 2023. The market will begin to recover from 2025. The Group plans to increase steel production this year by over 10% with the expectation that consumption growth will be at a similar level.
Analysts believe that in 2024, the construction materials industry has high expectations for efforts to promote public investment. From the end of 2023 to the beginning of 2024, the Government has been strongly directing the promotion of public investment. Many key transport infrastructure projects have been implemented, along with the approval of plans for many industrial and urban infrastructure projects.
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