Here’s what you need to know
February 10th not only ushers in the Year of the Dragon but also starts the countdown to the 30th anniversary of Dragon Capital. In this auspicious year, we discuss our expectations for Vietnam’s economy and equity markets, examining the critical elements influencing performance, and the potential risks and opportunities therein. We believe the key themes of the Year of the Dragon will be:
- An anticipated economic recovery with clearer visibility on its impacts, which should achieve ~6.5% GDP growth and 15-18% net profit growth (NPAT) for our top-80 universe. The Government’s role in this recovery is pivotal by the likely continuation of robust monetary and fiscal policies, expected to drive public investment and instil confidence in private sectors. Credit demand will likely accelerate as low domestic interest rates penetrate the economy, leading to an expected consumption recovery by 2H24.
- The market is expected to deliver a moderate return in line with earnings growth. Our forecast of 15-18% NPAT growth reflects a broad-based industry recovery with 2024F PER of 9.9x. We expect the sectors to exhibit the most significant influence in 2024 will be banking (+18% YoY), consumer discretionary (+47% YoY), and materials (+41% YoY), contributing a potential 71% to the VN Index (VNI) earnings.
- Our stock selection emphasises company resilience and consistent top-line growth, capitalising on expected early recovery dynamics. We project the market to shift from the trough to recovery, with our strategy pivoting from scrutinising balance sheets to focusing on P&L, capitalising on the power of market share gain for future earnings. In this transition, companies with appealing PS and PE ratios are likely to outperform…
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