Aviation stocks perform well on positive signs

Thursday, Dec 15, 2022 08:54

A plane of Vietnam Airlines at the international airport of Soekarno-Hatta in Jakarta. — VNA/VNS Photo

Many aviation and airline service stocks such as Vietnam Airlines JSC (HoSE: HVN), Taseco Air Services JSC (AST), Saigon Ground Services JSC (SGN) and Southern Airports Services JSC (UPCOM: SAS) witnessed outstanding performance on the trading day of December 12, with HVN hitting the ceiling price for the second session in a row, cushioning the market's downtrend.

HVN shares were also one of the top 10 stocks with positive growth. The movement was driven by positive signs in China as Beijing implemented measures to ease the COVID-19 pandemic prevention and control policy, and Viet Nam officially reopens a number of routes with China to serve the travel needs of passengers.

For the Vietnamese aviation industry, China accounts for more than one-third of international passenger volume pre-pandemic. It also has the largest proportion in the structure of passenger volume.

Recently, the International Air Transport Association (IATA) said that after a period of heavy losses due to the impact of the COVID-19 pandemic, airlines around the world were expected to start making profits again in 2023.

After cutting losses this year, airlines would likely earn US$4.7 billion in net profit in 2023, marking their first profitable year since 2019, before the COVID-19 pandemic broke out. Passenger volume was also forecast to reach 4.2 billion, equal to 85.5 per cent of 2019 levels.

According to IATA, airfares of airlines tracked by IATA increased by 4 per cent year-on-year in 2021. And the trend is expected to extend in 2022 and 2023, corresponding to IATA's forecast that the airfares of airlines will increase by 6 per cent year-on-year in 2022.

This will support airlines' profit margins as airlines in Viet Nam are in the process of shifting their raising fuel costs to passengers. Specialist Tran Khanh Hien of VNDirect Securities Corporation said that while domestic aviation had regained from losses during the pandemic, international aviation would be the focus in the coming period.

It was forecast that Viet Nam's international arrivals could fully recover to pre-pandemic levels in 2024, equaling 105.2 per cent of 2019 levels and might reach 118.9 per cent of 2019 levels in 2025. According to the General Statistics Office, international visitors to Viet Nam reached 596,900 arrivals in November, an increase of 23.2 per cent over the previous month and 39.7 times higher than the same period last year because the country had reopened for tourism, while international flight routes are restored.

On the stock market, aviation and airline service stocks are currently included in the list of recommended trading lists by numerous securities companies in December.

Analysts of VNDirect say that profit growth since the third quarter of 2022 - 2023 in most of the port, airline, and retail segments is relatively solid due to the recovery of international visitors.

The recent market correction has made the prices of stocks in the industry close to the time of the coronavirus outbreak in March 2020. Therefore, now is the time to accumulate airline stocks, with attractive prices and solid earnings growth. — VNS

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