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Sectors to watch as consumption rebounds and stock market ascends in Vietnam
In 2024, buoyed by the anticipated economic recovery, Masan boldly established profit growth targets surpassing those of 2023.
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Moreover, J.P. Morgan Financial Group expressed optimism regarding the Vietnamese stock market, with prioritized interest in Masan's MSN stock.
US$25 billion will be poured into Vietnamese stocks market
The World Bank estimates that upgrading the stock market could bring up to $25 billion of new investment capital from international investors into the Vietnamese market until 2030 with a number of important conditions, Ketut Ariadi Kusuma, head of the Finance, Competition, and Innovation Group of the World Bank in Vietnam, said at a conference to deploy tasks of developing the stock market in 2024 chaired by Prime Minister Pham Minh Chinh.
This is a record forecast that the World Bank has given for Vietnamese stocks if the market is upgraded to emerging market status.
In the upgrading process, two critical issues warrant focused improvement efforts and viable solutions to facilitate foreign investor participation in the stock market in the foreseeable future: deposit requirements (prefunding) and foreign ownership limits.
According to J.P. Morgan analysts, the Vietnamese government is currently completing the removal of pre-trade margin requirements in parallel with the launch of the KRX system.
The State Securities Commission of Vietnam said the system upgrade was in the final testing phase before deployment in the first quarter of this year.
In addition, the Vietnam Securities Depository is submitting a proposal on removing pre-transaction margin requirements and implementing the central counterparty (CCP) model with the new system.
This is one of the important criteria that the Vietnamese market is lacking, FTSE said.
Accordingly, if this bottleneck is resolved, FTSE can re-rank Vietnam as a Secondary Emerging Market in its annual review in September this year.
Anticipated retail consumer market recovery
According to updates from the General Statistics Office of Vietnam, trade and service activities were vibrant and maintained a high increase in the first three months, compared to the same period last year.
In the first quarter, total retail sales of goods and consumer service revenue spiked 8.2 percent over the same period last year.
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Passenger transportation rose 8.5 percent and rotation jumped 10.7 percent. Freight transportation expanded 13 percent and rotation surged 11.2 percent.
Moreover, the influx of international visitors to Vietnam surpassed 4.6 million people in the first quarter, marking a 72-percent increase compared to the same period last year and a 3.2-percent expansion compared to the same period in 2019, a year before the COVID-19 epidemic occurred, indicating a robust recovery in the tourism industry.
It can be said that these are good signs for the recovery of the consumer and retail market.
Masan Group, a leading enterprise in the consumer retail industry in Vietnam, expects consolidated net revenue this year to range from VND84,000 billion ($3.3 billion) to VND90,000 billion ($3.5 billion), growing from seven percent to 15 percent against the same period.
According to BSC Research forecasts, the core consumer segment including Masan Consumer and WinCommerce has gradually reached the point of efficiency when the compound annual growth rate (CAGR) of profit before tax and interest (EBIT) in 2023-25 hitting 20.8 percent compared to only nine percent in 2021-23.
Over the past three years, the company's leaders have clearly positioned Masan as a consumer company, with increased ownership and investment in consumer-related businesses as well as divestment from non-core animal feed business.
Which stocks are potential investments?
As billions of dollars flood into the market following Vietnam's upgrade, large-cap stocks within the VN30-Index, including HPG, VHM, VNM, VIC, MSN, SSI, VCB, VRE, VJC, SHB, POW, BID, STB, SAB, and BVH, meet the capitalization requirements. With enhanced freely circulating capitalization and liquidity characteristic of emerging markets, they are poised to attract significant foreign investment inflows.
Among them, Masan Group’s MSN stock is one of J.P. Morgan's top priority choices when analyzing the prospects of Vietnam's stock market this year.
Previously, J.P. Morgan released an analysis report and valuation for MSN in 2024, estimating it at VND102,000 ($4) per share. The average annual compound EPS growth from 2023 to 2025 is projected to reach 36 percent.
J.P. Morgan highlights MSN's strong standing in Vietnam's sizable and promising retail market, underlining its strategic capital allocation in key sectors such as consumption, retail, and consumer market development.
As a result, MSN stock is positioned as a prime example of Vietnam's compelling consumption narrative.
Given the upward trajectory of the Vietnamese market post-upgrade and Masan Group's prominent role in the retail consumer sector, MSN stock presents a favorable investment prospect, boasting substantial profit potential.
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