FROM RECOVERY TO GROWTH
Alongside the high economic growth in 1H2024, the earnings results for 1st 6 months of listed companies have posted a trend of recovery and growth across most industry sectors, particularly since the beginning of Q2 due to increased scale growth, improved asset turnover, and profit margin enhancement. The estimated EPS (12-month accumulated) for the overall market has grown by 10% YoY as of Q2-end compared to figure as of Q4-2023. For the full year 2024, we project that the overall market’s EPS growth could reach 14-18% YoY, driven by Banking and Real Estate sectors, with sustained growth trends expected across other industry sectors as well.Yield spreads above 4.0% usually only occur during unexpected headwinds and tend to pass quickly, allowing the market to rebalance and recover soon after. Therefore, with recent LTM EPS growth (as of Q2/2024) of approximately 10% compared to 2023’s figure, a possible P/E range can fluctuate around 14x - 15x (corresponding to a yield spread of 3.5% - 4.0%). This implies a balanced trading range for the VN Index of 1,237 - 1,325.
The current risks in the market include (1) the Federal Reserve's messaging and monetary policy stance, (2) geopolitical tensions, and (3) the domestic corporate bond market. Although these headwinds will eventually dissipate, the stock market often reacts more strongly and negatively than the actual situation warrants. As a result, VN Index may experience more negative volatility than we anticipate.
The selected investment opportunities for the second half of the year are businesses that maintain a recovery or growth trend in profits across the consumer goods, steel, banking, industrial zone, and seafood sectors. Additionally, the textile and garment industry can be considered revisiting if there is a significant discount in stock prices during market correction, given the positive profit outlook
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