VIETNAM'S retail sector will likely see a strong rebound in 2022, supported by robust consumer spending, growth potential in the groceries segment and investments deals, Maybank Investment Banking Group (IBG) said in a report on Thursday (Dec 23).

Analyst Nguyen Thi Sony Tra Mi expects a strong earnings rebound of around 40 per cent on year in FY2022, boosted by a low base in 2021, income and economic recovery, as well as rising consumer confidence as a result of less uncertainty and government stimulus packages.

Vietnam's groceries market should also provide "enormous room" for growth in the long run, as players transition into fast-moving consumer goods shopping - through mini-stores - amid a market that is still dominated by traditional channels such as wet markets and small stores.

Additionally, Maybank noted that deal activities such as investments and initial public offerings (IPOs) should provide a boost for a strong re-rating for Vietnam's local players, which dominate the retail sector.

The analyst's top pick for the sector is Mobile World Investment Corp, giving a "buy" call and target price of 180,000 dong. She noted that the stock is well-positioned to capture growth in the market, and its valuation is "undemanding" at 15 times the brokerage's estimates for FY2022 earnings.

The potential IPO of the company's minimart chain, Bach Hoa Xanh, which has rapidly expanded to capture market potential, is also an upside for Mobile World's share price.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

Maybank also recommends Phu Nhuan Jewelry, maintaining a "buy" call and target price of 118,000 dong on the counter. The analyst noted that the company has been recovering well post-lockdown, and the momentum will likely support a strong earnings rebound of around 45 per cent in FY2022.

In addition, she is positive on Masan Group and Digiworld Corp. Masan Group's share price is likely supported by its potential merger and acquisition deals and dividend payments, while its grocery unit The CrownX is one of the biggest names in the market.

Digiworld, which distributes information and communication technology products, will likely continue to benefit from digital transformation, Vietnam's growing consumption trends, and the company's efforts to expand its distribution of brands, products and services.

READ MORE

• Vietnam expected to lead Asean growth in 2022

• Maybank Kim Eng positive on Vietnam real estate as new govt looks to resolve regulatory bottlenecks

• Singapore is top investor in Vietnam for 2nd year running