Retail shares see great growth potential

Monday, Dec 12, 2022 10:09

A PNJ store in HCM City. The company reported profit after tax of VND147 billion in October, up nearly 23 per cent over the same period last year. — Photo courtesy of PNJ

Retail stocks have entered a recovery phase following the general market's upward trend, given their bright long-term prospects.

ETFs recently have made a net purchase of stocks on the Vietnamese stock market, including retail stocks such as PNJ of Phu Nhuan Jewelry Joint Stock Company, FRT of FPT Digital Retail Joint Stock Company (FPT Retail).

Of them, Viet Nam Equity Fund became a major shareholder of FPT Retail after raising the ownership rate of FRT shares to over 5 per cent. DC Development Market Fund has bought more PNJ shares, bringing the holding volume to more than 3.7 million units, equivalent to an ownership rate of more than 1.5 per cent. Foreign funds are holding more than 9 per cent of PNJ shares.

Many individual investors also put their faith in retail stocks. Nguyen Van Thang, living in Hoang Mai district, Ha Noi said: “Previously, despite the general impact of the market, FRT was still stable because of the long-term prospects of the business. I have faith in this stock.”

Mohammad Mudasser, leader of PwC Vietnam's working capital management consulting service, said that investors should consider stocks in the consumer-retail sector, because based on people's income and increasing young population, this industry has great potential.

Regarding the stock market outlook, Nguyen Trong Dinh Tam, deputy director of investment strategy at SSI Research, SSI Securities Company (SSI), said that the market was confirming the short-term uptrend with soaring sessions. The VN-Index recovered strongly from nearly 900 points in mid-November to 1,080 points at the end of last week, equivalent to an increase of 20 per cent, with high liquidity.

In the retail group, as of December 2, 2022, PNJ price increased by 22.2 per cent compared to November 15; FRT price increased by 21.1 per cent compared to November 15; DGW of Digital World Joint Stock Company (Digiworld) increased by 29.8 per cent compared to November 24; and MWG of Mobile World Investment Joint Stock Company increased by 24.6 per cent compared to November 24.

Medium and long-term prospects

PNJ has just announced business results in October 2022 with revenue of VND2.96 trillion (US$124 million), up more than 42 per cent. Profit after tax reached VND147 billion, up nearly 23 per cent over the same period last year.

In the first 10 months of 2022, PNJ recorded revenue of VND28.53 trillion, up 96 per cent. Profit after tax was VND1.48 trillion, up 118 per cent over the same period last year, exceeding the performance of the whole year of 2021.

SSI forecasts that PNJ's profit in 2022 may reach VND1.8 trillion and in 2023 will reach VND2.1 trillion.

FPT Retail's revenue is expected to remain positive thanks to the record-high iPhone orders and increased TV sales for the 2022 World Cup.

However, FPT Retail was under competitive pressure after Mobile World Group (MWG) established the Topzone chain - a chain of stores specialising in providing genuine Apple products - which could directly affect the revenue of Apple products, which accounts for one-third of total sales of FPT Shop and F.Studio chains of FPT Retail.

In 2022, DSC Securities Company estimates that revenue and profit of FPT Retail will reach VND28.05 trillion and VND450 billion, up 24 per cent and 1.56 per cent compared to 2021. FPT Retail aims to increase the number of stores to 1,000 by the end of 2022, up by 200 stores compared to the previous plan.

The growth momentum of FPT Retail's Long Chu pharmacy chain may be affected by the fact that the demand for drugs and medical supplies is no longer as high as during the COVID-19 pandemic. Competitive pressure in the market is gradually increasing, partially due to newly-opened Mobile World Group (MWG)'s An Khang pharmacy chain.

However, recently, the Board of Directors of FPT Retail approved a resolution to contribute an additional VND225 billion to FPT Long Chau Pharmaceutical Joint Stock Company, corresponding to buying 22.5 million more shares at the price of VND10,000 per share, thereby increasing the ownership rate from 85.07 per cent to 89.83 per cent of the charter capital of Long Chau.

For MWG, the revenue in October 2022 decreased, in which the revenue of all three store chains, namely Mobile World, Dien May Xanh and Bach Hoa Xanh, was lower than expected, showing the initial impact of inflation on the purchasing power of consumers.

Nguyen Duc Tai, Chairman of MWG's Board of Directors, expects that in the fourth quarter of 2023, Bach Hoa Xanh will be profitable. In 2023, Bach Hoa Xanh has a strategy to attract customers to the supermarket with promotions.

Bach Hoa Xanh is gradually closing the gap with traditional markets and supermarkets, expecting to attract more new customers thanks to convenience factors, which is the main driver for revenue growth in the future.

Vincom Retail Joint Stock Company (VRE) expects the retail rental segment to grow positively in 2023. Its profit in the first 9 months of 2022 reached VND1.94 trillion, an increase of 63 per cent over the same period in 2021, mainly thanks to the simultaneous opening of big brands at Vincom shopping centres.

According to Viet Capital Securities Company, Vincom Retail may open new shopping centres in 2023, affirming its position as the leading commercial centre investor in the industry.

Statistics from the General Statistics Office show that the total retail sales of consumer goods and services in November 2022 was estimated at VND514.1 trillion, up 2.6 per cent compared to October and 17.5 per cent compared to 2021. In the first 11 months of 2022, the total retail sales of consumer goods and services were estimated at VND5.18 quadrillion, up 20.5 per cent over the same period of 2021.

According to Nick Bradstreet, Savills' Asia-Pacific Head of Retail, Viet Nam is one of two prominent retail markets in Southeast Asia besides Thailand. Globally, especially companies with offices in Singapore are researching investment opportunities in this country. — VNS

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