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Modest profits likely for fertilizer, plastic stocks fall
Fertilizer and plastic stocks will create short waves of profit for investors as the market shows signs of recovering, analysts say.
PetroVietnam Chemical and Fertilizer Joint Stock Co. (DPM) and General Materials Biochemist Fertilizer Joint Stock Co. (HSI) are the two fertilizer stocks on the Ho Chi Minh Stock Exchange.
PetroVietnam Chemical and Fertilizer Joint Stock Co., Vietnam’s largest fertilizer maker, earned revenues of VND4.3 trillion (US$256 million) and after-tax profits of VND1.46 trillion ($87 million) in the first nine months of the year. It closed VND1,600 higher, or 4.52 percent, at VND37,000 on Friday.
General Materials Biochemist Fertilizer Joint Stock Co. announced third-quarter revenues of VND450 billion ($27 million) and a net income of VND29 billion ($1.7 million), a VND18 billion increase over last year. Its stock remained unchanged at VND10,500 on Friday.
HSI is much smaller than DPM with a chartered capital of VND100 billion ($5.8 million) against the latter’s VND3.8 trillion ($222 million).
“Despite the difference in chartered capital between us and DPM, we have the advantage of specializing in NPK fertilizer. Our brand of Con Trau [Buffalo] is popular in the Mekong Delta,” HSI general director Le Van Ngoc said. “We’re not among the fertilizer makers who may suffer heavy losses in the next six months after importing high-priced materials in the middle of this year.
“Opting for a steady strategy, we always import just enough volume of materials for three months’ production. Therefore we were not affected by slump in global fertilizer prices in recent months.”
Analysts said that when the market recovers, HSI looks set to rally sharply due to its low share price and the return on equity of more than 30 percent.
Demand for fertilizer is very steady as Vietnam is an agricultural country, so fertilizer stocks have very high potential, HCMC-based DongA Securities Co., an arm of the DongA Bank, said in a report.
It also said the supply of fertilizer is yet to meet the country’s agricultural demand. “Therefore fertilizer makers will continue to grow steadily,” it said.
Plastic stocks down
The plastic sector has been sent in a downward trend for the last two months because of the fall in oil prices, and its stocks have fallen below par.
Oil fell over 6 percent on Friday, as fears of economic slowdown weighed heavier than proposed production cuts by the world's major oil exporters.
US light crude for January delivery, which expired Friday, settled down $2.35 at $33.87 a barrel, the lowest since February 10, 2004, when it ended at the same level.
The more active February contract settled up 69 cents at $42.36 a barrel with cuts in OPEC production expected to take hold in that month. London Brent crude gained 64 cents, settling at $44.00.
Share prices of most of plastic stocks on the HCMC exchange have fallen below the face value of VND10,000 ($0.58).
Share prices of Tien Phong Plastic Joint Stock Co. (NTP) and Binh Minh Plastics Joint Stock Co. (BMP), the exchange’s two largest listed plastic makers, remain fairly low, closing at VND35,200 and VND29,500 respectively on Friday.
“Investors are showing caution on plastic stocks, which may be hit hard by current slumps in global price. However there will be many profitable opportunities from these stocks as their share prices and the price of raw material for producing plastic has dropped to very attractive levels,” said DongA Securities Co. analyst Trinh Vinh Quyen.
Tuong Chau
THANHNIEN
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