Reopening of tourism this month offers hope to businesses (VNG)
Reopening of tourism this month offers hope to businesses (VNG)
The official reopening of international tourism this month offers hope to tourism businesses who have been hit hard in the pandemic.
The Ministry of Culture, Sports and Tourism announced a plan to reopen tourism activities under the “new normal” state. Tourism businesses are hoping for recovery after 2 years of difficulties.
The financial report of the Airports Corporation of Vietnam (ACV) showed the business suffered a record loss of more than VND850 billion (US$37 million) in the third quarter of 2021. For the whole of 2021, the net profit of this business was only over VND830 billion, down by nearly half compared to 2020.
Vietourist Travel JSC (VTD) has reported that revenue increased by 25 per cent, reaching VND130 billion in 2021, but its gross profit was only half of the previous year, only VND4.1 billion. The company's inventory increased 3 times, liabilities increased 1.7 times. Loans and finance leases accounted for 63.5 per cent of total liabilities.
Although main business activities declined, in 2021, the company's pre-tax profit jumped to VND12.6 billion, up 3.3 times over the previous year thanks to a 24-fold increase in financial income compared to 2020, reaching VND15 billion. The reason was that the company divested from Hoang Kim Tay Nguyen, selling 1.44 million shares of Hoang Kim Tay Nguyen Joint Stock Company.
Ninh Van Bay Travel Real Estate (NVT) recorded net revenue of VND86 billion in the first 9 months of 2021, down 87.6 per cent over the same period in 2020. Losses after tax reached nearly VND700 billion, an increase of VND38 billion compared to the previous year.
Tay Ninh Cable Car Tour Company (TCT) also suffered a heavy loss in the fourth quarter of 2021 with a revenue decrease of 8.7 times over the same period of 2020, causing the company to lose VND5.8 billion in the fourth quarter of 2021. For the whole year, TCT reported a profit after tax of more than VND2 billion, a sharp decrease compared to the time before the pandemic. In 2020, the company also recorded only VND417 million in profit.
Hotel businesses also faced difficulties. In 2021, Ocean Hotel and Services Joint Stock Company (OCH) only achieved revenue of VND103 billion, down 74 per cent compared to the previous year while profit decreased by 99.4 per cent.
The most profitable company among tourism businesses was Dong A Hotel Group Joint Stock Company (DAH). In 2021, this company achieved revenue of over VND680 billion, exceeding 135 per cent of the plan and a profit of over VND44 billion.
Tourism stocks
Before the COVID-19 pandemic occurred, Viet Nam's tourism industry welcomed over 18 million international visitors and served 85 million domestic tourists in 2019. However, in 2021, international visitors to Viet Nam only reached 157,300, the number of domestic tourists was only 40 million. The reopening of the tourism market is bringing opportunities for businesses in this industry.
According to analysts of SSI Securities Company, the travel and tourism group will directly benefit from a strong recovery in visitor arrivals after 2 years of being impacted by the pandemic. Promising stocks include VTD (Vietourist Travel JSC), VNG (Thanh Thanh Cong Tourist Joint Stock Company), CTC (Hoang Kim Tay Nguyen Group JSC), TCT (Tay Ninh Cable Car Tour Company). VTD is planning to issue shares to increase capital to buy more cars and repay bank loans, so the profit brought to shareholders will be reduced.
The tourist accommodation group also benefits from the rise of occupancy rate with the increase in tourists. They include DAH (Dong A Hotel Group JSC), OCH (OCH Hotel and Service JSC) and NVT (Ninh Van Bay Travel Real Estate).
The tourist transport group only benefits from the transportation of passengers and goods on air, rail, road and sea routes. Stocks in this group are affected by the fact that petrol prices are staying at a high level.
In this group, ACV stock is considered to be the strongest beneficiary. According to SSI's prediction, in 2022, ACV's after-tax profit will increase by 341 per cent from the low base in 2021 thanks to a strong increase in international visitors.
