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Market Strategy – 1Q21 earnings review : A robust recovery

Strategy Note 06/05/2021    212


  • As at 05 May 2021, 577 listed companies on three bourses, representing 79% of market capitalisation, have released 1Q21 results.
  • 1Q21 aggregate earnings surged 80.7% yoy and even grew robustly 49% compare to pre-pandemic level (1Q19).

Fully recovered from 1Q20’s fall
Based on our estimates, 1Q21 aggregate earnings of listed companies on three bourses (HOSE, HNX, UPCOM) surge 80.7% yoy from the low base 1Q20 (-25.9% yoy). Market’s 1Q21 net profit is even 49.0% higher than pre-pandemic level (1Q19). Out of the 44 companies under our coverage that have reported their 4Q21 results, 64% were in line with our expectations while 11% beat our forecasts and 25% missed our estimates.

Steel, banks and financial services have a stellar performance in 1Q21
Steel manufacturers enjoyed higher average selling price (ASP) and strong sale volume, posting a 263.1% yoy growth in 1Q21 NP. In financial services area, mostly securities brokerages, 1Q21 NP jumped 16x yoy, as stock market rallied in both indexes and liquidity from low base in 1Q20. Banks ‘s 1Q21 earnings grew remarkably 80.6% yoy thanks to lower funding cost, contributing 36.3% to market’s earnings growth.

Global commodity prices hike created mixed impact to listed companies
At end 1Q21, S&P GSCI rallied 14.2% ytd and 82.9% versus end-1Q20. Global commodity prices hike fueled for the earnings growth of sectors, including: Chemical (+164% yoy), Mining (142.6%), Oil and gas recorded VND2,198bn in net profit versus serve loss in 1Q20. 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 cost. Thus, food producers posted a soft recovery of 12.0% yoy 1Q21 earnings growth, but still undershoot pre-pandemic level (-13% compared with 1Q19’s earnings).

But some sectors were not invited to the party
Among sectors that are still under pressure from the prolonged impact of Covid-19 outbreak, Travel and leisure (including airlines) continuously suffered another damaged quarter as international flights still froze. Transportation ‘s earnings dropped 14.3% yoy in 1Q21, followed by Industrial (-6.8%) and Utilities (-0.6%). Earnings disappointment of Utilities mainly stemmed from the softer earnings growth of GAS (-13% yoy) in 1Q21

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