Century Yarn management is confident that orders will improve in the remaining second quarters. Photo: ST

Many signs of recovery

The business results of Vinh Hoan Seafood Joint Stock Company (VHC) recorded a significant recovery in the second quarter of 2023 compared to the previous quarter with revenue growth of 22.6% and net profit increasing by 88.3%. Notably, pangasius revenue is estimated at VND 1.55 trillion, up 31% compared to the first quarter of 2023 thanks to sales to the US reaching VND 927 billion, up 31% and China reaching VND 324 billion, up 43%. This shows that consumption volume has improved significantly compared to the low level of the previous quarter in both markets.

Similarly, in the textile and garment sector, the net revenue of the second quarter of 2023 of Century Yarn Joint Stock Company (STK) reached VND 407 billion, down 23% compared to the same period in 2022, but it recorded an increase of 41% compared to the same period in 2022. with the first quarter of 2023. According to the analysis of SSI Research, compared to the first quarter of 2023, STK's sales volume increased by 48%. This shows that, although consumption volume is low compared to the same period last year, it has recorded a recovery from the low of the first quarter of 2023 for both virgin yarn (up 43.6%) and recycled yarn (up 53.5%). Along with the recovery in sales volume, the decrease in the price of virgin PET chips and recycled PET chips also helps to improve the gross margin of these fibers.

In the steel sector, the net profit in the second quarter of 2023 of Hoa Phat Group (HPG) increased sharply by 278% compared to the previous quarter. Accordingly, net profit margin improved from 1.5% to 5% in Q2/2023. This was mainly due to improved operating capacity and higher HRC price compared to the previous quarter.

According to analysis by SSI Research, although domestic demand is weak for both HRC and construction steel, HPG's consumption volume is recovering thanks to the HRC export channel. Currently, the company has pre-orders for HRC exports until September, which will help maintain a stable HRC consumption volume in the third quarter of 2023 at an average of 250,000 tons/month. In addition, HRC price is improved thanks to pre-signed orders, helping to offset the decline in steel price. Specifically, the average HRC price in the second quarter of 2023 increased by 7% compared to the first quarter of 2023.

It is ready for post-inflation opportunities

According to experts, in Vietnam's major export markets such as the US and EU, there have been signs of the recovery of consumption activities. Inflation has cooled down, inventory pressure has decreased and people are starting to shop again, housing construction is also warming up... The third quarter is a time to hoard goods for retailers to serving the peak season of the year-end festival. Accordingly, many positive forecasts have been made for Vietnam's exporters of furniture, textiles, and seafood.

Experts of BSC Securities Company believe that the quantity of orders of TNG Investment and Trading Joint Stock Company in the second half of 2023 will be stable and positive thanks to the fact that the customer base is not affected much by inventory problems. Through the exchange of BSC with TNG, the number of orders was basically filled in the third quarter of 2023 when Decathlon, Columbia Sportwear... orders for TNG. This is reflected in the revenue of July 2023 reaching VND 782 billion, up 2% over the same period.

BSC expects TNG's orders to the US to recover from the fourth quarter of 2023 as inventory pressure in this market has eased and demand gradually recovers when inflation cools down and brands prepare for the Spring 2024 crop. Similarly at STK, the management of this enterprise is also confident that orders will continue to improve in terms of quantity in Q3 and Q4/2023 compared to the previous quarter.

At PAN Group Joint Stock Company, the last six months of the year are the peak business season for all business segments of this enterprise, along with positive supporting factors, the enterprise is focusing on many solutions to achieve highest results. Especially in the seafood segment, market demand is expected to be positive again when at the end of the second quarter of 2023, PAN Group welcomed many foreign delegations to work, and signed orders also increased positively. In order to prepare for the recovery of orders, the newly self-controlled farming areas of enterprises are ready to put into stocking. In which, at Fimex - a member of PAN Group, a new farming area of more than 203 hectares is ready and officially released the first crop in May 2023, bringing the total area of Fimex's autonomous farming area to about 530ha, self-sufficient up to 40% of the input. In the pangasius segment, two new 22ha farming areas in Dong Phu are also ready for stocking in 2023.

In the tire industry, Da Nang Rubber Joint Stock Company (DRC) also sets a target for revenue in the third quarter of 2023 to grow by 9% compared to the second quarter of 2023 and profit before tax to increase by 14%. According to BVSC experts, this plan is feasible because the export market will continue to be strong at US $ 11-12 million/month when orders from the US market continue to increase with the prospect of consumption recovery in the domestic market, with the support of public investment and the reduction of VAT to 8%.

DRC is completing phase 3 of the project "Investment in expanding Radial truck tire factory to increase capacity to one million tires/year". This new project will be installed on bias tire factory mainly to utilize space and machinery. The company will adjust bias tire production equipment and will invest about 20-30 billion more to buy forming machines for the product. DRC's long-term plan is to supply more to the Brazilian market than the current 12–20 thousand tires/month. The large-scale investment is expected to help DRC reduce production costs and improve profit margins in the near future.

With the above plans, BVSC assesses that DRC's export activities will continue to be strengthened due to the expansion of products, markets and customers in the coming time. The long-term growth potential of DRC is also ensured by the phase 3 radial expansion project and the new PCR lightweight tire project.