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Attractive large-cap stocks
In its newly released February outlook report, Mirae Asset Securities Joint Stock Company (MASVN) made a positive assessment on the stock market in the context that economic activity has completely recovered thanks to an increased level in the adaptation to the strategy of living with the Covid-19 epidemic and vaccination.
However, the economy still faces various risks including new virus variants, a change in the direction of global monetary and fiscal policy, bad debt, and inflation. Therefore, the stock market will still experience more volatility in 2022.
Using the historical statistical P/E valuation, Mirae Asset believes that the P/E based price of the VN-Index has adjusted significantly from the 10-year average plus 1 standard deviation (P/E 17, 3 times) to 16.7 times, but still above the 10-year average of 14.9 times.
In particular, according to the P/E statistics of the indexes in the last 1 year, Mirae Asset believes that large-cap stocks (representing the VN30 index) are trading at a low level and are relatively more attractive than medium-cap stocks (represented by VN70), as well as the general market (represented by VN-Index).
Through business results statistics in 2021, the profit of companies listed on HOSE (228 out of 405 companies announced) increased by about 39% over the same period.
According to estimates of Mirae Asset, EPS growth in 2021 of the whole HOSE is also about 39%, in 2022 is expected to reach nearly 19%. Accordingly, this securities company forecasts that the securities, banking, retail, software and service industries, and real estate will have higher growth rates than the general market in 2022.
With the market EPS expected to grow by 28.6%, Mirae Asset maintains its base scenario forecast for the VN-Index at 1,700 points, corresponding to a reasonable P/E of about 16 times and an EPS growth in 2020-2022 of about 28%.
Comparing with other markets in the world and in the region, Mirae Asset assesses that Vietnamese market is being traded at a relatively reasonable P/E level with a high ROE. The current trading P/E of VN-Index is higher than that of emerging and frontier markets, but lower than many regional markets such as India, Indonesia, and the Philippines.
However, with the prospect of economic recovery and high EPS growth, this company believes that it is possible for Vietnam to maintain a high ROE.
"According to statistics, VN-Index EPS growth consensus is expected to be 19% YoY in 2022, higher than most other markets in the region, except for the Philippines. However, despite expectations of EPS growth of the Philippines (PCOMP) in 2022 is up to more than 31%, the projected EPS in 2022 is still 4% lower than the pre-pandemic period, so we believe that the Vietnamese market is still relatively attractive compared to other markets in the region," said Mirae Asset's report.
Promising industry groups
Meanwhile, analyzing the opportunities of industry groups, Agribank Securities Joint Stock Company (Agriseco) noted that the opportunities in 2022 will be clearly differentiated with potential risks in groups of highly valued stocks. Therefore, choosing the right stocks and businesses to invest in will be a top priority.
It is estimated that when public investment disbursement increases by 1%, GDP will increase by 0.058%. Thus, accelerating public investment is expected to be a driving force for GDP growth and a premise for real estate, construction and building material businesses to benefit in the coming time.
Forecasting the trade balance, Agriseco Research believes that with the reopening and global economic recovery, the trade balance will continue to be in surplus in 2022. Vietnam's key export products are expected to continue. continue to grow in 2022 such as textiles; fiber; rubber; wood; Seafood.
In addition, Vietnam has plenty of room to deploy stimulus packages to support the economy, creating ripple effects on various industries. Around the world, after the governments of other countries launched support packages, stock indexes in countries around the world such as the US, Europe, Thailand, Japan, and China all rebounded strongly.
Agriseco Research believes that it is forecast that retail, oil and gas, consumption, industrial zones, and exports will continue to recover. The promotion of public investment drives growth in real estate, building materials and construction. In addition, banking and securities are forecast to maintain growth when credit demand increases strongly and NIM is stable. The report forecasts profit growth of the whole market in 2022 to reach about 25% - 30% over the same period, with the driving force from large-cap groups, real estate and banks.
From here, Agriseco Research forecasts that the VN-Index in 2022 may reach the milestone of 1,600 - 1,700 points. Strong cash flow continues to flow into the stock market, the number of new accounts opened will continue to increase sharply in 2022. At the same time, there is a prospect of upgrading to emerging markets, launching new products such as T0, derivatives, short sale.
However, Agriseco also pointed out that some of the risks associated with the pandemic are still unpredictable, with the emergence of new variants that could slow down the process of the "new normal". The inflation factor inched up and interest rates may probably raise at the end of 2022 after business activities have recovered. In particular, the report assessing the valuation ground of some groups of stocks is at a level many times higher than the profit prospect of enterprises.
