Strategy Note /

Vietnam Strategy: April 2022 – Tailwinds from AGM and earnings season

  • Macro: Uneven recovery in Q1 22; inflation outlook will depend on the recovery of domestic demand

  • We expect cash flow in the market to flow into industries with strong growth outlook in 2022

  • We reiterate our Accumulate recommendation on sectors such as Banks, Real Estate, Consumer, and Technology

Lam Nguyen
Lam Nguyen

Banking, Market Strat

Kiet Tran
Tung Do
Rong Viet
11 April 2022
Published byRong Viet

We remain positive on Vietnam equities in the long term due to the following structural catalysts: better domestic demand, companies’ earnings prospect, economic activities and FDI inflows on the back of broader economic reopening and fiscal stimulus package disbursement. These factors will provide an efficient buffer against higher, albeit in control, inflation and external risks namely geopolitical uncertainties and slowing global growth. 

We also see upside potential from the perspective of our coverage with current 2022F net earnings growth of 22%, while the valuation of our stock universe is around its 5Y mean of 13.8x. We reiterate our Accumulate recommendation on sectors such as Banks, Real Estate, Consumer, and Technology - our top preferred industries in our model portfolio for 2022, all of which have generated alpha ytd.   

From a near-term perspective, we expect the market will maintain solid momentum as 2022 AGMs and Q1 22 business results kick in. According to data from companies in our coverage, Real Estate, Technology, Consumer and Banks are also among top industries in terms of 2022 guided NPAT growth. These industries mostly consist of large cap stocks, which we continue to favour over smaller cap stocks due to: (1) recent strong fund inflow in VN Diamond; (2) cautious sentiment around small cap stocks recently; (3) more appealing valuation (see Appendix 6-8 in the full report). 

Hence, we reiterate our Accumulate recommendation on stocks in these sectors (namely TCB, ACB, MBB, MWG, PNJ, FPT) as we believe these positions could also provide positive short-term gains. Additionally, we also favour stocks that are expected to post high earnings growth and/or have interesting stories in the near term, namely NT2, ANV, QNS, VPB, HDB, PVT.

We have detailed macro, sector and stock analysis in the full 28-page report.