An industrial park of Tan Tao Investment and Industry Corp in Binh Chanh district, HCM City. (Photo: VNA) Hanoi (VNS/VNA) - Despite short-term difficulties, the prospects for industrial park stocks will increase after the COVID-19pandemic is over, driven by the relocation of global firms to diversify supplychains, with many picking Vietnam as their destination.
Thecomplex development of the pandemic had adverse impacts on investment andleasing in industrial parks.
Vietnamhas 336 industrial parks with atotal area of 97,800 hectares, of which 261 are in operation. Data from theMinistry of Planning and Investment showed the average occupancy rate inoperating industrial zones was at 76 percent by end-June.
Bothrevenues and profits of industrial park (IP) developers slumped in the firstsix months. Total revenues of 18 listed IP companies reached 21.4 trillion VND (922.4 million USD), down 14 percent from 2019, while theirnet profits declined 18 percent to 3.6 trillion VND.
Poorbusiness results negatively affected stock prices of big companies such asBecamex IDC (BCM), whose revenue was down 24 percent and net profit decreased52 percent year-on-year, and Kinh Bac CityDevelopment Share Holding Corp (KBC), whose revenue and net profit plummeted bymore than 50 percent.
Sharesof these two companies also lost about 10 percent in the first half of the year.
Accordingto Saigon Securities Inc (SSI), the COVID-19 pandemic has caused seriousdisruptions in global supply chains and businesses are seeking to diversifytheir production activities, from which Vietnam is expected to benefit.
Ifthe pandemic was brought under control by the end of this year, demand forindustrial parks will increase, especially from firms planning to move part oftheir production to Vietnam, such as Microsoft, Panasonic, Sharp and FoxConn.
Thepolicy of encouraging foreign direct investment (FDI) of Japanese andVietnamese governments can also create opportunities for some Japaneseenterprises to expand production to Vietnam, such as Shin-Etsu Chemical, HoyaCorporation, Matsuoka, Meiko Electronics, Yokowo and Nikkiso.
TheGovernment’s planning of new industrial zone development for 2021-2025 can also help increase the area of newindustrial zones in the future. Large IPs with a total land area of 1,000ha ormore could attract large FDI corporations, SSI wrote in a report.
Theimprovement of infrastructures, such as the Bien Hoa-Vung Tau, Dau Day-Phan Thiet expressways, North-South Expressway, Cai Mep Thi Vai Portand Gemalink Port, facilitate connection for industrial zones.
Inaddition, the leasing price of industrial land in Vietnam is about 30-40 percentlower than that of Indonesia and Thailand which can be an advantage inattracting FDI. Therefore, the land price in IPs is expected to increase by 7-8percent in the South and 5-6 percent in the North in 2021, according to SSI.
Shareprices of many IP developers have also increased recently.
BCMlost 10 percent in the first six months but started to pick up since August.BCM is being traded around 42,000 VND (1.81 USD) per share this week, up 62 percent sinceits bottom in June.
Shruggingoff losses in the first six months, shares of KBC also rose 63 percentcompared to early this year, being traded around 13,500 VND a share.
Pricesof smaller companies’ shares such as Tan Tao Investment and Industry Corp (ITA),Sonadezi Chau Duc Shareholding Co (SZC) and Long Hau Corp (LHG) also climbed between 51-79 percenteach./.
VNA
