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Market Strategy – 2Q21 Earnings review: Softer earnings growth

Strategy Note 04/08/2021    274

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  • As at 03 Aug 2021, 700 listed companies on three bourses, representing 85% of market capitalisation, have released 2Q21 results.
  • 2Q21 market aggregate earnings surged 66% yoy, lower than that of 92% yoy in 1Q21.

Positive earnings momentum to continue in 2Q21
Based on our estimates, 2Q21 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) surge 66.0% yoy from the low base 2Q20 (-16.0% yoy). 2Q21 earnings growth was weaker than that of 92.2% yoy of 1Q21 but still 51% higher than pre-pandemic level (2Q19). Out of the 48 companies under our coverage that have reported their 2Q21 results, 56% were in line with our expectations while 21% beat our forecasts and 23% missed our estimates.

Steel and Financial still shine
Steel manufacturers enjoyed higher average selling price (ASP) and strong sale volume, delivered a 326.4% yoy growth in 2Q21 NP. Among Financial sector, listed brokerage firms recorded 120.8% yoy in NP growth as 2Q21 appears to be another good quarter for both indexes and market liquidity. 2Q21 NP growth of listed banks decelerated to 34.1% yoy from 79.0% yoy of 1Q21 as large banks (VCB, CTG) surprisingly posted negative bottom-line growths due to heavy provisioning. Property ‘s aggregate earning grew 102.6% yoy, higher than that of 38.2% yoy of 1Q21, thanks to housing selling price hike and stronger sale volume.

Global commodity prices hike created a mixed impact to listed companies
At end-2Q21, S&P GSCI rallied 30.9% ytd and 64.6% yoy, fueling for the earnings growth of some certain sectors, including: Chemical (+52.6% yoy), both Oil & Gas and Mining recorded positive net profit versus heavy loss in 2Q20. 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 14.7% yoy 2Q21 earnings growth, slightly higher than that of 13.7% yoy of 1Q21.

Current wave of Covid-19 cast a shadow over 3Q21 earnings
Notwithstanding the resilience of listed corporate earnings in 2Q21, the country is currently facing its more serious wave and yet to be brought under control. This is likely to greatly impact 3Q21F earnings. Though, Transportation and Retail recorded positive results in 2Q21 (171%/61% yoy, respectively), nationwide lockdown protocols will hinder the recovery momentum in 3Q21. Additionally, Travel and leisure (including airlines) and Beverages will likely have another loss quarter.

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