A factory of Tien Phong Plastic JSC (Source: VNA) Hanoi (VNS/VNA) - Listed plastic companies have seen their marketvalues expand 15-50 percent in the last two months on low oil prices and increasedconsumption.
Some plastic producers trading shares on the three markets include Bình MinhPlastics JSC, Tien Phong Plastics JSC, Dong A Plastics JSC, Hanoi Plastics JSC,and An Phat Bioplastics JSC.
The two-month rally of plastic stocks began in late July.
As of October 6, Binh Minh Plastics shares (HoSE: BMP) have gained a total of30.6 percent, and Tiền Phong Plastics shares (HoSE: NTP) have increased bytotal 31 percent.
Shares of Dong A Plastics (HoSE: DAG), An Phát Bioplastics (AAA) and Hanoi Plastics(HoSE: NHH) have risen between 20 and 30 percent in the same period.
The rally was boosted by the rebound of market demand in the constructionsector as Vietnamese consumers are trying to adapt to the new life amid theCOVID-19 pandemic.
According to securities companies and market analysts, the local stock markethas benefited from the expectations that the Government will increase spendingon infrastructure development.
Such expectations have helped boost material producers, including plasticcompanies, analysts said.
The growth of plastic companies has also been bolstered by the decline of oilprices starting in September.
Brent crude has dropped as much as 13.8 percent to 39.27 USD a barrel sinceSeptember 1 while US crude has slid and changed little around 40 USD a barrel.Both suffered a plunge in late April with US crude retreating to negative valuefor the first time in history.
Oil is the material used to create compounds for plastic production. Therefore,the decline of oil prices is expected to help local plastic firms reduce theirproduction expenses, brokerage firms said.
Nguyen The Minh, analysis director at Yuanta Securities Vietnam Co, said localplastic producers had struggled a lot in 2018-19 because oil prices rose andmarket competition got fiercer.
The sector’s average profit growth in 2018-19 scaled back to only 5 percentcompared to 30 percent recorded in 2017, he said.
The market had now stabilised and the toughest time had gone, but local firmswere diverged, he said. Except for the two largest companies – Binh MinhPlastics and Tien Phong Plastics – other companies now have a 10-15 percentgross profit rate.
Vietinbank Securities Co (VietinbankSC) said in a report that the volatility ofoil prices was the major reason for Binh Minh Plastics to raise its grossprofit by 28.2 percent on-year in the second quarter and 26.4 percent in thefirst half of the year.
In the January-June period, the company saw its total revenue rise 8 percenton-year and post-tax profit jump 23.4 percent on-year to VNĐ2.27 trillion and 257billion VND, respectively.
At Dong A Plastics, lower production costs helped reduce cost of sales in thefirst six months by 38.6 percent on-year and raise its gross profit, whichincreased by 4.2 percent on-year to 12.8 billion VND. The firm logged a 1.5 percentgrowth in post-tax profit, which reached 52.2 billion VND.
Business plan beaten
Based on the current conditions, local plastic producers have a great chance tofinish their business plans ahead of schedule.
VietinbankSC said that Bình Minh Plastics had the largest market share in theSouth, healthy financial strength with low lending-over-total asset ratio, nolong-term loans and positive cash flow in recent years.
In the first six months, the company fulfilled half of its full-year revenueplan, which was 4.56 trillion VND, and nearly 70 percent of pre-tax profitplan, which was 465 billion VND.
Tien Phong Plastics eyes a 3 percent growth rate in both total revenue andpre-tax profit in 2020, which are projected to reach 5.1 trillion VND and 470billion VND.
Tien Phong Plastics general director Chu Van Phuong said that production andselling expenses dropped 14.9 percent on-year in the first six-month period.
The company could also benefit from the European Union-Vietnam Free TradeAgreement (EVFTA), which took effect on August 1, Phuong said.
Under the EVFTA, Vietnamese seafood exporters are expected to enjoy a zero percenttariff when shipping products to European markets.
Tien Phong Plastics also sold pipes to help seafood firms raise aquaculturespecies, the general director said, adding a recent deal with Minh Phu SeafoodCorporation would help the firm log higher earnings in 2020.
In January-June, the company earned 2.15 trillion VND worth of total revenueand 237.7 billion VND worth of pre-tax profit, down 13.4 percent and 5.3 percenton-year./.
VNA
