Cement stocks are expected to be attractive to investors as the industry is growing on the back of Vietnam’s booming construction demand, analysts with Tan Viet Securities Incorporation (TVSI) said.
For a longer view, the domestic cement sector will grow as producers are cutting costs by finding new cheaper materials and renovating production technology. “The sector is closely related to the construction sector which is developing very fast, facilitating cement producers to boost production, revenues and profits,” TVSI analysts said in a recent report.
In 2009, cement sales in Vietnam reached 45.4 million tons, up 13.4% on year, according to statistics of Saigon Securities Inc. (SSI).
Cement stocks will be attractive for investors in the medium to long-term. “The current price of cement stocks is reasonable with a P/E ratio lower than the market average level,” analysts said.
SSI analyst Nguyen Duc Minh noted demand for cement will remain high this year as the government has prioritized infrastructure projects.
Some cement stocks on Vietnam’s exchange include Hoang Mai Cement (HOM), Ha Tien 1 Cement (HT1), Can Tho Cement (CCM), But Son Cement (BTS), Bim Son Cement (BCC), Yen Bai Cement (YBC) and Thai Binh Cement (TBX).
“HOM will be an attractive option thanks to its dominant market share in the central region, while HT1 and HT2 are expected to raise selling prices soon,” TVSI noted.
Minh from SSI said for a short to medium-term outlook, his company prefers HOM because of its strong fundamentals; but for a longer view, they like BCC, BTS and HT1 thanks to their potential growth.
However, TVSI also warned of rising production costs faced by cement companies after recent increases in electricity and petroleum prices. (Investment, TVSI)
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