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3Q21 Earnings review – The slowdown before the sprint

Strategy Note 03/11/2021    131

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  • As at 03 Nov 2021, 717 listed companies on three bourses, representing 86% of market capitalisation, have released 3Q21 results.
  • 3Q21 market aggregate earnings increased encouragingly 17.8% yoy despite stricter social distancing protocol to curb the daily cases.

Earnings growth decelerate but still positively surprise us
Based on our estimates, 3Q21 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) increased 17.8% yoy, lower than that of 1Q21 and 2Q21, 92.0% yoy and 72.3% yoy respectively. The results have surprised us as 3Q21 GDP slumped 6.2% yoy amid stricter nationwide social distancing. 9M21 aggregate earnings grew robustly 54.6% yoy. Out of the 51 companies under our coverage that have reported their 3Q21 results, 53% were in line with our expectations while 18% beat our forecasts and 29% missed our estimates.

Banking lose some glister while Steel and Brokerage still shine
Steel manufacturers delivered 17.21% yoy growth in 3Q21 NP following higher average selling price (ASP) and stronger sale volume. Among Financial sector, securities brokerage firms recorded 119.3% yoy in NP growth as 3Q21 was another good quarter with both indexes and market liquidity surge. On the other hand, 3Q21 earnings growth of listed banks decelerated to 13.1% yoy from 79.0%/34.3 yoy of 1Q21/2Q21 since lower credit growth and heavy provisioning. Property sector’s 3Q21 earnings grew modestly 6% yoy, lower than that of 96% yoy in 2Q21 and 18% in 3Q20.

Companies in consumer space get harder hit by the Delta variant
As stricter lockdown and movement control during Aug – Sep, Beverage, Automobile, Retail, Transportation witnessed the sharp drop in 3Q21 earnings with -65%/-54%/-53%/-18% yoy, respectively. Other sectors experienced negative 3Q21 earnings growth including Construction and Material (-32% yoy), Mining (-37%).

Global commodity prices hike created a mixed impact to listed companies
At end-3Q21, S&P GSCI rallied 44.7% ytd and 73.8% yoy, fueling for the earnings growth of some certain sectors, including: Chemical (+172.1% yoy), Forestry and Paper. Food producers, show mixed performance: rice exporters and sugar producers are riding on the rice and sugar prices spike, while dairy, animal feed, edible oil and meat producers’ earnings growth is under pressure from higher material input costs. At all, we saw that food producers posted a soft recovery of 5.1% yoy 3Q21 earnings growth, slightly higher than that of 18.2% yoy of 2Q21.

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