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WHAT SHOULD WE EXPECT FOR 2022?
WHAT SHOULD WE EXPECT FOR 2022?
Re-ignite all growth engines
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We expect 2022F GDP to grow 7.5% yoy, propelled by four growth engines: manufacturing and exports to resume expansion, resilient FDI amid global supply chain diversification; and domestic consumption to rebound following upcoming fiscal supports. Its macroeconomic fundamentals could be strengthened with higher trade surplus, as well as current account surplus and solid foreign reserves.
Market to be fueled by the inflow of individual investors
Vietnam equity market witnessed the growing participant of individual investors who are looking for higher-yield investment instruments in the context of low deposit interest rates. Despite the challenging times, the number of new individual accounts to open record new high in a few last months of 2021, which catapulted stock trading value 2.5 times yoy surge. We believe thanks to the growing digital transformation of stock market, local inflow will extend further as the stock-invested penetration rate of Vietnam is only 3.5%, relatively low compared to other ASEAN markets.
Earnings growth on the mend
Aggregate earnings growth decelerated to 15.8% yoy in 3Q21 but was still robustly 53.4% yoy in 9M21. The results have surprised us as the economy was hit hard by stringent movement control in 3Q21. We estimate market EPS to surge 39% yoy in FY21F and sustain the strong average growth of 20% yoy over FY22-23F. Key drivers for market earnings growth will come from the solid performance of Property developers, Oil & Gas and the bounceback of retailers and food producers.
Vietnam stands out as markets which are cheap compared to their earnings 2021-23F growth potential
As at 06 Dec 2021, according to Bloomberg data, VNIndex was trading at 16.7x trailing 12-month P/E (TTM P/E), which is slightly lower than the P/E of 17.3x at the beginning of 2021. Compared to regional peers, Vietnam’s forward P/E looks cheaper than neighbouring markets; however, Vietnam is still a frontier market while most of the regional markets are emerging markets.
Sources: VNDIRECT RESEARCH
Sources: VSD, VNDIRECT RESEARCH
Sources: VNDIRECT RESEARCH
Sources: Bloomberg, VNDIRECT RESEARCH
