A series of construction enterprises will benefit from the Government implementing multiple strategic public investment infrastructure projects.

 

Shares of Fecon Joint Stock Company had a price increase of 37 per cent in May 2023, from nearly VNĐ11,000 per share to over VNĐ15,000 per share, after this company continuously won bids for projects.

 

In May, Fecon won bids for projects worth a total value of VNĐ300 billion, including the concrete embankment of the Cầu Hôn project worth nearly VNĐ60 billion in Phú Quốc, soil cement pile D1200 of the Royal Group Headquarters project worth VNĐ22.2 billion in Cambodia, and production and pile pressing at the Clubhouse Vũng Bàu project worth VNĐ12.2 billion in Phú Quốc. In the first five months of 2023, Fecon won bidding packages with a total value of nearly VNĐ800 billion.

 

Fecon said the company selected projects carefully, ensuring the best resources for projects and that they did not try to win bids at all costs. This was a safe plan in the context that lending interest rates of banks are still high and cash flow is still scarce in the market, it said.

 

Many other stocks such as Đèo Cả Traffic Infrastructure Investment (HHV), CIENCO4 Group JSC (C4G), Licogi 16 (LCG) also witnessed increases in price in May as well as in the first five months of 2023, thanks to the positive developments in business operations.

 

Đèo Cả Traffic Infrastructure Investment (HHV) has won three bidding packages of the North - South Expressway project, phase 2. Besides construction, Đèo Cả is operating six BOT (build-operate-transfer) toll stations, which have been its main source of revenue for the past year, collecting about VNĐ2.6 billion of gross profit per day. The increased travel demand due to the recovery of the tourism industry is expected to bring more revenue for these BOT stations of Đèo Cả.

 

According to DSC Securities Company, the construction industry has a positive outlook in 2023.

 

In the 2023-25 period, Đèo Cả is expected to participate in investing in many more expressways, with a total investment of about VNĐ40 trillion, focusing on projects in the form of Public-Private Partnerships (PPP). In order to have enough resources, Đèo Cả plans to raise capital.

 

In 2023, the revenue and profit of Đèo Cả is forecasted by DSC to reach VNĐ2.63 trillion and VNĐ345 billion, up 25.5 per cent and 16.2 per cent, respectively, compared to 2022.

 

CIENCO4 Group JSC (C4G) is also expected to benefit when the Government implements a series of strategic transport infrastructure projects such as the East North-South Expressway (phase 2), the Long Thành international airport, Hà Nội and HCM City ring routes, and green energy traffic projects.

 

In the recent 2023 Annual General Meeting of Shareholders, Cienco 4 General Director Nguyễn Tuấn Huỳnh said that in the first quarter of 2023, Cienco 4 achieved revenue of VNĐ460 billion, profit after tax of nearly VNĐ41 billion, increases of 8 per cent and 27 per cent, respectively, over the same period in 2022. In 2023, Cienco 4 plans to achieve revenue of VNĐ4.5 trillion and net profit of VNĐ330 trillion.

 

The Construction Industry Outlook 2023 Report of VNDIRECT Securities Company states that this year promoting public investment disbursement will help infrastructure construction companies make a breakthrough in both revenue and profit in the 2023-25 period.

 

Four factors promoting public investment

 

The disbursement rate for public investment as of April 30, 2023 is estimated to reach 14.7 per cent of the National Assembly's 2023 plan, with total disbursed value of VNĐ711.7 trillion, an increase of more than VNĐ130 trillion compared to the 2022 plan.

 

In May, investment capital from the State budget reached VNĐ45.1 trillion, and in the first five months of 2023 it reached VNĐ177 trillion, up 19.7 per cent from last year, completing 25.5 per cent of the yearly plan.

 

VNDIRECT believes that there are four supporting factors that will accelerate public investment projects this year.

 

First, Việt Nam's public debt has decreased significantly in recent years thanks to high GDP growth in the 2016-22 period and tight spending control. The public debt ratio decreased from 51 per cent in 2016 to 40 per cent in 2022, according to IMF estimates, much lower than the public debt ceiling of 60 per cent of GDP. Low public debt creates room for expansion of fiscal policy to support economic recovery.

 

Second, government bond yields have fallen sharply since the beginning of 2023. As of May 10, in the primary market, 10-year and 15-year bond yields fell 1.67 per cent and 1.7 per cent, respectively, down to 3 per cent per year and 3.1 per cent per year. On the secondary market, 5-year and 10-year bond yields fell by 2.42 per cent and 1.89 per cent, to 2.6 per cent per year and 3.2 per cent per year, respectively.

 

Third, inflation slowed significantly. The consumer price index in May 2023 only increased by 2.43 per cent over the same period last year, while in January it increased by 4.89 per cent; on average, in the first five months of 2023, the Consumer Price Index increased by 3.55 per cent. When inflationary pressures decrease, the Government may consider loosening fiscal policy.

 

Fourth, the Prime Minister directed the transport sector to complete preparations to start the construction of three expressways, Châu Đốc – Cần Thơ - Sóc Trăng, Biên Hoà - Vũng Tàu and Khánh Hoà - Buôn Ma Thuật, and two ring roads including Ring Road 4 in Hà Nội and Ring Road 3 in HCM City. These projects are expected to start construction before June 30, 2023.

 

Mạc Quốc Anh, Vice President of HCM City's Small and Medium Enterprises Association, said the second and third quarters of 2023 are an important period for businesses when policies to promote the economy are implemented, especially in terms of finance, fiscal, cost reduction, and loan interest reduction in the banking system.

 

“I think the second and third quarters of 2023 will be a growth period for Vietnamese businesses,” he said. —VNS