Tourism stocks expected to shine bright in 2022

Tourists visiting a beach in Đà Nẵng City during the Tết holidays. VNA/VNS Photo Trần Lê Lâm

Positive news about the resumption of aviation and tourism services have helped tourism stocks to surge, with many even hitting celling prices continuously, despite the VN-Index struggling around the 1,500-point level.

On February 15, Việt Nam officially reopened international flight routes. The planned reopening of tourism activities in March has brought positive signals on the strong recovery of the country’s tourism industry in 2022.

In addition, on February 17, at the seventh ASEAN Economic Community (AEC) Dialogue, all participants emphasised the awareness of mutual recognition agreements in the tourism sector and the need to accelerate the reopening to resume tourism activities post COVID-19. They also affirmed that deeper integration will further boost the financial and tourism sectors of the region.

Responding to the above positive news, tourism stocks surprised the market.

Statistics showed that on February 17, many stocks went to a hard ceiling, with VTD, OCH Hospitality & Service JSC (OCH), CTC, Đông Á Hotel Group JSC (DAH ), VNG and NVT, hitting the ceiling prices. In addition, Superdong Fast Ferry Kiên Giang JSC (SKG) jumped by 2.6 per cent.

Closing the session on February 18, DAH and NVT recorded ceiling prices for a second straight session. The rest were up in a range of 0.6 - 6.8 per cent, such as VTD up 6.8 per cent; OCH rising 4.1 per cent, and CTC up 3.2 per cent.

Tourism stocks have not received much interest from investors despite witnessing good business results and high pidend payments. The reason is partly that the trading volume is small, resulting in low liquidity.

Moreover, during the last two years, COVID-19 clouded the industry’s outlook, making tourism stocks less attractive.

However, the recent strong rallies on bright prospects show that they are promising stocks in the post-pandemic era.

Data showed that in the first two months of 2022, demand among international and domestic tourists tended to increase remarkably.

Nguyễn Châu, CEO of Oxalis Adventure, said that the number of tourists booking tours in March and April had reached more than 80 per cent. Many accommodation facilities were fully booked on April 30, which is a national holiday, while others were preparing to welcome guests in the summer, Châu added.

He raised concerns about the shortage of human resources working in the tourism industry after the pandemic, affecting the recovery of the industry.

In the past two years, the COVID-19 pandemic has destroyed the tourism industry, casting a gloomy outlook on the industry’s general profit.

Poor profit periods

Hoàng Kim Tây Nguyên Group (CTC) said that its profit after tax in 2021 was negative, as its revenue in the fourth quarter of last year plummeted by nearly half over the same period of 2020 to only VNĐ34.7 billion (US$1.5 million). The company explained that the outbreak of the disease had greatly affected operations, especially hotel and restaurant businesses, while expenses still had to be allocated.

Similarly, Ninh Vân Bay Travel Real Estate (NVT) continued to record a fourth consecutive quarter of losses, reporting a loss of VNĐ65.1 billion in 2021. Its total accumulated loss now is approximately VNĐ708 billion, accounting for 78 per cent of the company’s charter capital which is VNĐ905 billion.

Meanwhile, Thành Thành Công Tourist (VNG) also said that its holding company posted a loss during the period. However, thanks to the restructuring of the investment portfolios of its subsidiaries, the company still recorded a consolidated profit after tax of VNĐ1.2 billion.

Vietourist Travel (VTD) and Daseco (DSN) are other companies applying the same strategy of increasing profits of financial investment activities to offset losses in the core businesses.

In 2021, Daseco saw its net revenue reach VNĐ25.2 billion, down more than 70 per cent compared to 2020. Running business below cost has caused the enterprise to report a gross loss of VNĐ1.5 billion, while in the same period of 2020 it recorded a gross profit of VNĐ51 billion.

The highlight in its business results in 2021 was financial revenue tripling to nearly VNĐ41 billion, which mainly came from transferring of securities. Therefore, it still reported a profit after tax of more than VNĐ24.2 billion, down 41 per cent over 2020. This was also the lowest profit of Daseco since 2008.

Economic experts say that tourism plays an important role in national economic development, which is considered one of the three key economic sectors, contributing positively to the growth of the economy as a whole.

However, the ongoing pandemic has had a strong impact on the Vietnamese economy, and tourism has been hit hard. Flight bans, travel restrictions and tourists’ concerns over the pandemic have caused many hotels, restaurants and retail chains in tourist destinations to be deserted, and tourism revenue plunged. — VNS