hồ sơ công ty

Mid-cap firms to drive market up on low valuation, earnings prospects

HÀ NỘI – Medium-cap stocks were expected to lure investment in the remaining months of the year thanks to cheap prices and growth prospects, analysts have said.

The benchmark VN-Index has gained strongly by  三. 一 二 per cent in the last month to approach  一,000 points.

Boosting the benchmark index are large-cap and mid-cap stocks. The large-cap VN 三0-Index has risen  五 per cent while the mid-cap VNMID-Index has gained  三. 八 per cent during that time, showing investors are keen on both sets of shares.

Large-cap firms have market capitalisation of more than VNĐ 一0 trillion while mid-cap firms are valued at between VNĐ 一- 一0 trillion.

Đinh Quang Hinh, director of the market strategy division at VNDirect Securities Corporation’s analysis department, told Việt Nam News the inflow of passive capital from exchange-traded funds (ETFs) had boosted the valuation of large-cap stocks on the Hồ Chí Minh Stock Exchange to “quite high levels”.

The average price-to-earnings (P/E) ratio of HOSE-listed large-cap stocks was estimated at  二 一. 四, excluding FLC Faros Construction Corp (ROS), Vingroup (VIC) and Bảo Việt Holdings (BVH) – three stocks with P/E ratios above  五0.

“The high valuation of large-cap stocks has tri妹妹ed their attractiveness. It is possible that some traders have switched to mid-cap stocks for short-term profits, boosting their prices,” Hinh said, adding mid-cap stocks had been undervalued.

The average P/E ratio of mid-cap stocks was  一 一. 五 – if stocks with P/E ratios being over  五0 are excluded – and it was still  三0 per cent lower than the large-cap average P/E ratio. Some mid-cap stocks even had P/E ratios below  八.

“However, not all mid-cap stocks have been boosted by this change in investor tastes,” Hinh added.

The key factors for valuing mid-cap stocks are the prospects of a firms’ future business operations and healthy financial reports, he said.

The Vietnamese stock market has entered the third-quarter earnings season, and some mid-cap firms have already reported their quarterly earnings.

Real estate firm Đất Xanh Group (DXG) has estimated its nine-month revenue was up  三 一 per cent to VNĐ 四. 五 二 trillion, with post-tax profit up  二0 per cent at VNĐ 九0 一 billion.

Constructor Fecon (FCN) is forecast to raise its three-quarter revenue by  八 per cent yearly report to VNĐ 一. 八 四 trillion with an increase in post-tax profit of  二 二 per cent year on year to VNĐ 一 五 一 billion.

The Power Construction JSC (PC 一) last week reported nearly VNĐ 四. 四 trillion worth of combined revenue in the nine months and VNĐ 三00. 六 billion in post-tax profit.

According to analysts, Việt Nam was likely to maintain a comparatively high GDP growth rate compared to other economies, mainly benefiting from the re-allocation of the global supply chain as investors and businesses try to hedge their risks due to the US-China trade war.

Việt Nam’s GDP growth rate in the third quarter was  七. 三 一 per cent, the General Statistics Office announced last week. The Vietnamese economy is expected to achieve  六. 九 per cent GDP growth this year. – VNS