Car consumption in the first 2 months of the year increased sharply, shares of “giants” holding shares in Honda, Toyota, and Ford quickly returned to historic peaks.
The Covid-19 epidemic has significantly affected automobile consumption in Vietnam. According to a sales report from the Association of Automobile Manufacturers (VAMA), in the period 2017-2019 (before the epidemic), automobile consumption in Vietnam grew steadily at about 10% per year. However, after the appearance of the Covid-19 epidemic, this number continuously decreased in the last 2 years, the total car consumption in 2021 decreased to more than 277,000 vehicles.
Currently, the most stressful periods of the COVID-19 epidemic have temporarily passed, and Vietnam’s economy has begun to recover. The return of travel to normal when the distancing regulations are eased has helped the Vietnamese auto market to warm up thanks to the increased demand for cars.
The prosperity started after many localities “opened up” from the end of the third quarter of 2021, the Vietnamese auto market began to warm up with the loosening of social distancing regulations, helping to increase the demand to buy cars again. . The latest bright sign recorded After the first 2 months of 2022, sales of cars under 9 seats in the whole market reached 41,317 vehicles, up 42% over the same period last year.
A series of popular car models “exploded” in early 2022 with high sales results that brought sales statistics back to “green” after many dismal months. Most companies have strong sales growth compared to the same period last year, such as Toyota up 56%, Honda up 30%, Thaco up 48%,…
On the other hand, the Government’s promulgation of Decree No. 103/2021/ND-CP to continue reducing registration fees by 50% for domestically manufactured and assembled cars is also a factor supporting automobile demand. If before, cars with 9 seats or less had a registration fee of 10% of the car’s selling price, 12% in Hanoi alone; then, with the policy of 50% reduction in registration fees, people reduce tens of millions of dong depending on the type of vehicle, thereby stimulating the demand for car consumption.
The market gradually recovered, the “giants” of the Vietnamese auto industry returned to historic peaks
In Vietnam, Vietnam Engine and Agricultural Machinery Corporation (VEAM, stock code: VEA) is one of the major beneficiaries of the recovery of the auto industry.
VEAM’s main business is manufacturing, assembling and trading agricultural machines and trucks, but most of VEAM’s annual profit comes from joint ventures and associates. VEAM currently holds 30% of contributed capital in Honda Vietnam, 20% at Toyota Motor Vietnam and 25% at Ford Vietnam Co., Ltd. Male.
Owning large shares in joint ventures Toyota, Honda, and Ford has helped VEAM just “sit still” to generate profits of trillions of billions annually.
In 2021 alone, the joint ventures and associates brought in a profit of more than 5,100 billion VND for VEAM, accounting for most of the pre-tax profit of 5,942 billion VND for the whole year of this business.
With large profits received from joint venture companies, VEAM has accumulated a huge amount of cash. The financial statement data at the end of 2021 shows that VEAM has up to 11,800 billion VND to send to the bank. The huge amount of deposits mentioned above has helped VEAM earn hundreds of billion more in annual financial profits. In 2021 alone, VEAM has collected more than 700 billion dong of interest on bank deposits. In the previous year, VEAM’s bank deposit interest even reached nearly 1,000 billion dong.
Currently, bank interest rates are at historic bottoms and many forecasts suggest that interest rate trends will likely increase in the near future amid rising inflation. In case the deposit interest rate increases, it will help VEAM earn more profits from bank deposits.
In the shareholder structure of VEAM, the Ministry of Industry and Trade is currently the largest shareholder holding nearly 89% of the shares. With the specific nature of State shareholders, most of VEAM’s profits are distributed as cash dividends. This helps VEAM become one of the leading high-dividend companies in the market with a common dividend ratio around 50%.
The attractiveness of Vietnam’s automobile market has also made foreign funds strongly buy VEA shares since its listing on the stock exchange. In which, Pyn Elite Fund is the most prominent name that owns VEAM. It is estimated that Pyn Elite Fund owns more than 40 million VEA shares at the end of February 2022.
On the stock exchange, VEA stock is currently trading around the threshold of VND 46,000/share and this is also the historical peak of the stock.
VEA stock returns to historic peak
“Bright door” in 2022 thanks to economic recovery after COVID-19
A recent industry report by SSI Research estimates that auto demand will grow 16% year-on-year in 2022. SSI Research thinks that with a low comparative base in 2021, along with a very low car ownership rate in the country. Vietnam and the Government’s 50% reduction in registration fees under Circular 103/2021/ND-CP can be a solid foundation for high growth in 2022.
Sharing the same view, Viet Capital Securities (VCSC) believes that the growth in auto consumption in the first two months of the year shows that domestic demand continued to recover after the Government eased social distancing measures in the early part of the year. October 2021 and strengthen the resilience of automotive demand in Vietnam supported by a growing upper middle income class.
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at Blogtuan.info – Source: cafebiz.vn – Read the original article here
