4Q22 Earnings review – Not a strong finale

• 4Q22 market aggregate earnings plummeted by 30.4% yoy, the biggest drop since the Covid-19.
• FY22 market earnings grew modestly 7.1% yoy, much lower than our forecast of 16.7% yoy for FY22.

4Q22 market earnings growth was surprisingly disappointed
Based on our estimates, 4Q22 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) decreased by 30.4% yoy, the biggest drop since Covid-19 outbreak. The disappointed 4Q22 results have dragged FY22 market earnings growth down to only 7.1% yoy, much lower than our forecast of 16.7% yoy for FY22. Among 64 companies under our coverage that have reported their 2022 results, 36% were in line with our expectations while 12% beat our forecasts and 52% missed our estimates.

Steel makers, Food producers and Brokerage firms are not out of the woods

Listed steel makers’ 4Q22 NP dropped further 155.6% yoy following (1) weakening sales volume and (2) shrinking gross margin by 1.8% pts vs 3Q22. Food producers extended the downward trajectory with 2Q22/3Q22/4Q22 NP dropped 7.7%/13.8%/80.7% yoy. The dropped in Food producers’ 4Q22 NP were driven by MSN, which recorded a drop of 93.1% in 4Q22’s NP as they posted a significant one-off gain (~VND5,700bn) in 4Q21. Brokerage firms experienced a sharp drop of 96.6% yoy in 4Q22’s earning as market liquidity contracted by 58.4% yoy in 4Q22. Together, Steel makes, Food producers and Brokerage firms took away 24.8% of market’s 4Q22 NP growth.

Banking and Utilities recorded positive performance

Listed banks posted healthy 23.2% yoy in 4Q22’s NP growth, thanks to the contribution of VCB (+53.9% yoy), and BID (+88.8% yoy) as the results of easing provision expenses. Utilities recorded the highest earnings growth in 4Q22 (+30.4% yoy), the same growth rate as 3Q22 but sharply reduced from the peak of NP’s growth in 2Q22 (+88.7% yoy). GAS was the key driver, contributing 34.2% to Utilities’ 4Q22 NP growth. Together, Banks and Utilities contributed 7.6% to market’s 4Q22 NP growth. Notably, despite the difficult time, Property developers still grew 0.9% yoy in 4Q22’s earnings on the back of VIC (4Q22: VND1,559bn vs 4Q21: -VND5,964bn) and VRE (+549% you).

Gross margin to improve, leverage ratio to edge down

4Q22’s market gross margin (non-bank) slightly inched up 0.1% pts qoq for the first time since 3Q21 with the biggest improvement coming from Utilities (+3.6% pts), Property (+2.8% pts), and Oil & Gas (+2.5% pts). Market (excl. bank) ‘s leverage ratio extended the downturn since 1Q22 as the results of corporate bond buyback and weak funding demand as corporates tend to delay or postpone their business expansion. The high-interest rate also increased the market average cost of debt from 5.8% to 5.9% in 4Q22.

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