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3Q22 Earnings review – More disappointments than positive surprises

Strategy Note 09/11/2022    104


  • 3Q22 market aggregate earnings grew 17.4% yoy, higher than that of 11.3% yoy growth seen in 2Q22.
  • Among companies under our coverage that have reported 9M22 results, we see more disappointments than positive surprises as 33% missed our estimates.

3Q22 market earnings growth gather steam

Based on our estimates, 3Q22 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) increased 17.4% yoy, higher than that of 2Q22 (+11.3% yoy), but slightly below 3Q21 (+18.9% yoy). For 9M22, market earnings grew 21.4% yoy, still inline with our forecast of 23% yoy for FY22F. Among companies under our coverage that have reported their 9M22 results, 50.0% were in line with our expectations while 16.7% beat our forecasts and 33.3% missed our estimates.

Banking, Property and Transportation were top growth contributors

Listed banks’ earnings rose robustly 59.2% yoy in 3Q22 thanks to (1) the recovery of BID’s earnings (158% yoy), making up 12% of banking sector; (2) provisioning pressure ease. Property recorded positive 3Q22 earnings growth (+42.5% yoy) for the first time since 3Q21, thanks to strong positive 3Q22 NP of KBC (VND1,919bn) and VIC (VND947bn), compared to negative results of VND68bn/VND351bn in 3Q21, respectively. Transportation (ports and logistics) earnings extended the upward trajectory since 1Q22 (+33.1% yoy), 2Q22 (+116.6% yoy) and 3Q22 (+340.6% yoy). The biggest contributor is ACV (airport) which posted VND2,397bn in 3Q22 earnings (vs. a loss of VND855bn in 3Q21). Together, Banks, Real Estate, and Transportation contributed 30.4% to market’s 3Q22 NP growth.

Time is getting harder for Steel makers and Brokerage firms

Listed steel makers recorded a loss of ~VND4,500bn in 3Q22 bottom lines following high inventory costs, subdued selling prices and rising FX loss. Brokerage firms experienced a sharp drop of 68.1% yoy in 3Q22’s earnings as stock market liquidity compressed 40.9% yoy in 3Q22 and corporate bonds market has suffered from negative sentiments after many violations.

Gross margin to shrink across the board, leverage ratio to improve

3Q22’s market gross margin (non-bank) compressed significantly to 15.5% from 19.7% in 3Q21. Market (excl. bank) ‘s leverage ratio was inching down since 1Q22. We estimated total debts balance of listed corporates compressed 0.9% qoq but expanded 7.7% yoy. The wave of corporates bond buyback in the past 3 months could partially explain this downturn. Accordingly, cost of debt ratio of listed corporates weakened to 5.8% in 3Q22 from that of 6.1% in 2Q22, but still higher than FY21 average of 5.5%.

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