A series of large corporations reported a sudden increase in profits in the first quarter of 2021 and a positive outlook for the whole year despite the impact of the Covid-19 pandemic. This was an unusual development but was not too surprising.
Vingroup (VIC) of billionaire Pham Nhat Vuong has released consolidated financial statements for the first quarter of 2021 with a net profit of nearly VND2,100 billion, nearly 5 times higher than the same period of last year. This is an impressive result thanks to the outstanding performance of three major real estate projects - Vinhomes Ocean Park, Smart City and Grand Park – and VinFast car and Vsmart smartphone sales.
According to the report, the total consolidated net revenue in the first quarter of Vingroup reached nearly VND23.3 trillion (about $1 billion), a sharp increase of 52% year on year.
Vingroup's revenue and profit increased sharply despite the negative impact from the Covid-19 epidemic. Vingroup's revenue from tourism and entertainment activities in the quarter fell 48% year-on-year due to entry restrictions on international tourists.
Previously, two subsidiaries - Vinhomes and Vincom Retail - both recorded impressive business results despite the epidemic. Vinhomes Joint Stock Company (VHM) observed a surge in revenue of the first quarter of 2021, which was 2.1 times higher year on year, up to nearly VND13 trillion. Vincom Retail (VRE) recorded a 32% increase in consolidated revenue in the first quarter of 2021, with VND2,226 billion.
Hoa Phat Group (HPG) of billionaire Tran Dinh Long also announced after-tax profit of over VND7 trillion in the first quarter, three times higher than the same period last year and revenue of nearly VND31.2 trillion, up 62%.
Profit after tax of Hoa Sen Group of tycoon Le Phuoc Vu increased 5 times year on year, to VND1,035 billion. its net revenue rose by 88%, to over VND10.8 trillion.
Tien Len Steel (TLH) even reported first quarter EAT that was 30 times higher year on year, to VND120 billion. SMC steel saw a 15-fold increase in profit after tax to VND216 billion. Vietnam Steel Corporation - VnSteel (TVN) reported profit increasing by 13.5 times to VND394 billion.
In the real estate segment, Nam Long Investment Joint Stock Company (NLG) reported net profit in Q1/2021 three times higher year on year.
Thai Holdings (THD) of new billionaire Nguyen Duc Thuy reported Q1 profit 40 times higher year on year, to VND368 billion.
In the industrial real estate segment, VRG Saigon Investment (SIP) reported a fourfold higher profit in Q1 over the same period, reaching over VND208 billion. Tan Tao (ITA) Group reported a 2.3-fold increase in profit to VND58 billion.
In the retail segment, FPT Retail (FRT) recorded after-tax profit of VND31 billion, accounting for one third of the annual profit plan.
Earlier, some banks reported high profits. MBBank (MBB) recorded consolidated profit of over VND4,570 billion, 2.1 times higher than the same period in 2020. Vietcombank estimated Q1 profit of VND7 trillion dong, 34% up year on year.
In the financial and securities segment, SAM Holdings (SAM) reported first quarter profit increasing 4.5 times. Bamboo Capital (BCG) gained profit of 20 times more, with VND163 billion. Saigon Securities (SSI) recorded pre-tax profit of VND528 billion, up 34 times year on year.
Phu My Fertilizer (DPM) recorded an increase of 74% year on year of profit thanks to a sharp increase in fertilizer prices. Binh Dien Fertilizer (BFC) reported a 15-fold increase in profit in the same period.
The increase of profit of businesses in many industries from technology, manufacturing, construction materials, services, agriculture and processed food to finance and banking and securities is unusual but not surprising.
The reason for the sharp increase in profits is a strong recovery in demand and rising selling prices of goods.
In the field of construction materials, the soar in steel prices increased the profits of steel manufacturers many times. According to the Vietnam Steel Association, steel prices in Q1 increased by about a half over the same period.
The shortage of steel supply while steel demand in China increased after the epidemic and economic stimulus measures such as infrastructure investment helped Vietnamese steel enterprises earn high profits. Hoa Phat Group is one of the biggest beneficiaries when steel prices rise because the company takes the initiative in raw materials.
It is forecast that local businesses will record high profits in 2021, with an average increase of 20%.
Realtors and securities investors have been pocketing big money in recent months.
During the “season” of shareholders’ meetings, Vietnamese banks are confident about their plans to increase profits by several trillion dong in 2021. Several banks have set a record growth target of up to 30%-50%.