Retail shares see great growth potential

A PNJ store in HCM City. The company reported profit after tax of 147 billion VND 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 the Phu Nhuan Jewelry Joint Stock Company, FRT of the FPT Digital Retail Joint Stock Company (FPT Retail).

Of them, Vietnam Equity Fund became a major shareholder of FPT Retail after raising the ownership rate of FRT shares to over 5%. 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%. Foreign funds are holding more than 9% of PNJ shares.

Many inpidual investors also put their faith in retail stocks. Nguyen Van Thang, living in Hoang Mai district, Hanoi 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%, with high liquidity.

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

Medium and long-term prospects

PNJ has just announced business results in October 2022 with revenue of 2.96 trillion VND (124 million USD), up more than 42%. Profit after tax reached 147 billion VND, up nearly 23% over the same period last year.

In the first 10 months of 2022, PNJ recorded revenue of 28.53 trillion VND, up 96%. Profit after tax was 1.48 trillion VND, up 118% 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 1.8 trillion VND and in 2023 will reach 2.1 trillion VND.

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 28.05 trillion VND and 450 billion VND, up 24% and 1.56% 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 225 billion VND to the FPT Long Chau Pharmaceutical Joint Stock Company, corresponding to buying 22.5 million more shares at the price of 10,000 VND per share, thereby increasing the ownership rate from 85.07% to 89.83% 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 nine months of 2022 reached 1.94 trillion VND, an increase of 63% 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 514.1 trillion VND, up 2.6% compared to October and 17.5% compared to 2021. In the first 11 months of 2022, the total retail sales of consumer goods and services were estimated at 5.18 quadrillion VND, up 20.5% over the same period of 2021.

According to Nick Bradstreet, Savills' Asia-Pacific Head of Retail, Vietnam 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./.