VietNamNet Bridge - As expected, given the difficult economic conditions, most of the listed firms’ business results in the first quarter were disappointing.

Hoang Thi Hoa, head of analysis at Viet Capital Securities Co., said companies operating in the rubber latex export, sugar, and petroleum-related sectors posted good results due to increasing prices of those goods but they were in the minority.

Hoa said low earnings of listed companies in the first quarter were in line with the economic uncertainties. Forecasting this situation, most listed companies gave 2011 business plans similar to last year’s.

Nguyen Xuan Minh, CEO of Vietnam Asset Management (VAM), said given the current environment of high interest rates, rising raw material costs and low liquidity, the fund manager’s expectation on earnings of listed firms for the first half of this year was generally low and this situation could potentially drag further into the second half.

Sectors impacted the most are property, building materials, shipping and financial services, Minh said and added that obviously, companies with high debt leverage and high dependence on imported input are being heavily affected.

“At this time, we expect the petroleum-related and consumer sectors would do well,” he said.

Based on the first quarter earnings of listed enterprises, experts forecast business operation of companies would face difficulties for the rest of the year due to macroeconomic uncertainties. Inflation is the index that is most noticeable at this time. Experts expect the inflation rate would be hard to improve in coming months, thus eating into corporate earnings.

Minh said to fight against high inflation, the central bank needed to tighten its monetary policy. With the lending rate reaching 20% and over, it is generally very difficult for enterprises to run their businesses. “As long as interest rates remain high, corporate operation will be tough,” he added.

In the report on the stock market in 2011, Viet Dragon Securities Co. expected the economy would not have positive changes for this year with the 2011 gross domestic product growth expected at 6%-6.5% and revenue growth of listed firms forecast at 20%-25%.

Although revenue continues growing, given disadvantaged economic conditions, monetary tightening would impact profits of financial enterprises that contributed to 44.1% of the whole market’s profits last year. The company expected profits from the finance sector to increase 10% while property would remain unchanged. Profit of the whole market is expected to rise 10%-15% this year, lower than the growth of 17.3% in 2010.

Fiachra Mac Cana, managing director of the Hochiminh City Securities Co. (HSC), commented on April 14 that the company revised up its forecast for the April consumer price index from 1.5% to 2.5%.

“Our internal model is signaling that pressure from the last two increases in petrol prices has set off a spiral of sympathetic prices increases in many goods ranging from food to transportation and much of this will feed through in this month’s release,” he said.

This will come as a shock to the market as it seems the unraveling of latent inflation pressures plus the delayed effect from the February dong devaluation continues to dog consumer prices.

And another petrol price increase cannot be ruled out given that the price stabilization fund seems to have ceased to function for now, he said.

Even so given the measures in place to control money supply, the currency and now credit growth, Mac Cana said, “We still maintain that we are at the top of the current inflationary cycle and expect the numbers to look much better in a month or two.”

Meanwhile, VAM expects inflationary pressures would gradually subside from the third quarter and the Government’s comprehensive package would take effect to regain investor confidence.

Vo Tri Thanh, deputy head of the Central Institute for Economic Management (CIEM), earlier expected that inflation would cool down by the end of the third quarter this year.

Source: SGT