Public investment to bolster stock prices
Public investment to bolster stock prices
With the Government increasing public investment and speeding up the disbursement progress, many businesses on the stock market will benefit.
On December 6, 2022, the Ministry of Planning and Investment, authorised by the Government, sent a report to the National Assembly Standing Committee on the allocation and disbursement of State budget capital in the first 11 months of this year and the measures to accelerate disbursement of public investment capital in the last month of the year.
By November 30, 2022, the total state budget capital allocated by ministries, central agencies and localities to projects that are eligible for disbursement reached VND550.4 trillion (US$23.3 billion), reaching 94.9 per cent of the assigned plan. The unallocated capital was VND29.64 trillion. Disbursement of public investment capital in 11 months reached nearly VND338.32 trillion, equivalent to 58.33 per cent of the whole year’s plan.
Previously, on November 10, 2022, the Prime Minister sent a request to ministries, branches and localities to accelerate the disbursement of public investment capital in the last months of 2022 and early 2023.
In order to maintain the recovery momentum and positively support the economic growth of the whole year of about 8 per cent in 2022, all levels and sectors need to focus on accelerating the disbursement of public investment capital, considering this a driving force to promote economic growth and a key political task, PM said in the request.
The Government is prioritising resources for public investment, with a plan to disburse up to VND790 trillion in 2023.
Transport infrastructure is one of the key points of the next year's public investment plan as well as that of the 2021-2025 period. Recently, the Ministry of Transport issued a document requesting a number of localities to speed up site clearance for component projects of the construction of the North-South Expressway in 2021 - 2025.
The Ministry of Transport has approved 12 North-South expressway component projects, phase 2 with a total length of nearly 724 km, shortening 5 per cent of the project investment preparation time compared to the previous time, ending the project investment preparation phase and moving on to the project implementation phase.
Airport infrastructure of Long Thanh International Airport project was also started in December 2022.
The policy to promote public investment is forecast to help many businesses on the stock market benefit. For example, in the first 8 months of 2022, Deo Ca Transport Infrastructure JSC (HHV) won more than 10 bidding packages with a total value of nearly VND1.5 trillion.
In the group of building materials, Binh Minh Plastics is considered to have more advantages in terms of input materials from the parent company (SCG Group of Thailand).
Enterprises owning quarries near key projects with large reserves such as Hoa An and Bien Hoa Construction and Building Materials Production (VLB), with the Tan Cang and Thien Tan and Dong Nai quarries also enjoy great benefits. Hoa An in the third quarter of 2022 earned revenue of VND92.8 billion, profit after tax of VND19.1 billion, up 37.4 per cent and more than 11.4 per cent over the same period last year. KBSV believes that the company's profit from the fourth quarter of 2022 will have positive prospects.
For enterprises in the cement industry, public investment is considered a driving force to help improve domestic demand for cement in the context of cement exports being forecast to continue to be less positive. The price of coal accounts for a large proportion of the input costs of cement enterprises, decreased by more than 20 per cent compared to the peak set this year, which will help improve the profit margin of this industry.
Mirae Asset Vietnam Securities Company forecasts that revenue of Ha Tien 1 Cement Co in 2022 and 2023 will reach VND9.34 trillion and VND7.41 trillion, respectively; profit reached VND277.8 billion, down more than 24 per cent compared to 2021 and VND423 billion, up 52.3 per cent over the same period of 2022.
In the steel group, enterprises such as Hoa Phat Group (HPG), Nam Kim Group (NKG) are considered to benefit from public investment, but in fact, the large consumption volume of steel enterprises is still in the area of housing construction and export, so if the domestic real estate is still quiet and export sees difficulties, the business performance of this group will not improve.
