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Construction materials to do well this year: Analysts
The outlook is positive for the construction materials sector this year, stock experts from Saigon Securities Inc. (SSI), Vietnam’s largest listed brokerage, have said in a report.
“The construction material sector’s growth rate increased 8.74 percent year-on-year in the first half of the year after falling 0.4 percent last year,” analysts from the Hanoi-based brokerage wrote.
The healthy increase came in the wake of the government’s policies encouraging investment in basic construction as part of efforts to boost the economy, they said.
“In the economic stimulus plans, the government made favorable budget allotments for essential sectors like infrastructure, traffic and irrigation constructions,” SSI analysts said.
The slump in key construction material prices like cement, steel and tile, which plummeted by 30-40 percent compared with last year’s figures, also boosted the construction sector, they added.
The sector is likely to grow at a slower pace in the next quarter because of the rainy season, they said, adding: “We expect the sector will continue to grow robustly in the last three months of the year and into 2010.”
Cement, steel and plastic pipes Cement producers fared better than expected in the first half, the report said.
However, they noted some regional differences.
“Cement makers in the north enjoyed large sales thanks to the construction sector’s positive growth rate in the first half. But business in the long-term is likely to slow down there due to harsh competition. Their counterparts in the south, meanwhile, have good prospects as the region’s current supply remains limited.”
Meanwhile, steel makers were hit hard by the reduction in inventory prices at the end of last year, which was caused by a slump in demand. But at the end of March, demand grew strongly.
Steel makers’ revenues will not improve much this year as prices have fallen 30-40 percent from last year. “But their rate of return will be improved thanks to the government’s 4 percentage-point interest-rate subsidy. They will also get back provisions made for reductions in inventory prices,” the report said.
Among listed plastic producers, Tien Phong Plastic Joint Stock Co. (NTP) and Binh Minh Plastic Joint Stock Co. (BMP) are the two biggest companies, holding 25 percent and 20 percent of the nation’s market share respectively.
“While Tien Phong, listed on the Hanoi Stock Exchange, has the largest distribution network in the north, Binh Minh, listed on the Ho Chi Minh Stock Exchange, is more dynamic in upgrading its machinery and its marketing activities,” the analysts said.
“We expect Binh Minh will be able to grow faster and increase its market share over the next several years.”
thanhnien, dtck
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