Vinh Tuy 2 Bridge under construction. (Photo: VNA) Based on the regular pattern of public disbursement, which movesslowly in early year but much faster later, KB Securities Vietnam JSC (KBSV)has forecast higher public spending for Q4.
In fact, recent governmental moves have borne out the forecast.
The Ministry of Transport gave the go-ahead to 12 sub-projects inthe North-South Expressway Project, second phase, in mid-July. All sub-projectsin landing areas of the Long Thanh International Airport Project were plannedto begin construction in December.
Three decrees were issued and six working groups were dispatchedto speed up the process.
The Government's Resolution No 124 promulgated in mid-Septemberstipulates that public disbursement reach around 95-100% of the target set bythe Prime Minister. Of which, at least 50% of the Socio-Economic Recovery andDevelopment Programme must be delivered in 2022.
KBSV projected public investment to accelerate and reach around 90-95%of the target this year, equivalent to roughly 200 trillion VND (8.4 billionUSD) spent in the last four months.
KBSV said the rising public expenditure is expected to give amajor boost to the steel sub-industry as higher construction demand drivessteel consumption.
The same goes for the stone sub-industry. Major beneficiariesinclude Hoa An JSC (HOSE: DHA) and Bien Hoa Building Materials Production andConstruction JSC, which own Tan Cang and Thien Tan quarries.
Cement is the next sub-industry to benefit from higher publicspending. However, the boost from the public sector would be of minor effect asit is absorbed by the supply-demand imbalance in the sub-industry.
Specifically, cement producers oversupply about 50 million tonnesannually and the figures are expected to climb to 58 million tonnes by 2023.For investors, it is advisable to monitor HT1 stock (VICEM Ha Tien Cement JSC)and BCC stock (VICEM Bim Son Cement JSC).
The situation is much better for the plastic pipe sub-industrythanks to the fiscal stimulus and the falling prices of PVC, an input material.Tien Phong Plastic JSC (HNX: NTP) is expected to be the largest beneficiary asit operates in an economic zone targeted by public investments.
Higher public spending would be equally beneficial to bitumensub-industry but the benefit is believed to come late as bitumen surfacing onlybegins in the last phase of the projects.
PLC (Petrolimex Petrochemical JSC) is a stock worth monitoring inthe sub-industry since the company holds roughly 30% of the market shares. Thecompany produces around 350,000 tonnes of bitumen annually, outpacing allrivals.
Construction firms, undoubtedly, would find themselves at anadvantage amid higher delivery of public money on construction projects. Stocksto monitor include HHV (Deo Ca Traffic Infrastructure Investment JSC), C4G(CIENCO4 Group JSC), and VCG (Vietnam Construction and Import-Export JSC).
Notably, CIENCO4 is one of the largest traffic infrastructurebuilders in the country, engaging in big projects including Mai Son- Highway 45Expressway, Vinh Tuy 2 Bridge, Vinh Hao-Phan Thiet Expressway and Phan Thiet-DauGiay Expressway.
The faster implementation of the North-South Expressway Project,second phase, is expected to drive the smart-traffic sub-industry forwards. Itis advisable to monitor ITD (Tien Phong Technology JSC) and ELC (ElcomTechnology Communications Corp.).
In the bullish electrical construction sub-industry, REE(Refrigeration Electrical Engineering Corp) is worth monitoring as the companyis a prime candidate for the Long Thanh International Airport Project.
Realty firms and logistics firms located in areas adjacent to theprojects are believed to benefit indirectly from the fiscal expansion. However,the extent of the benefits depends on various factors, leaving some room foruncertainty./.
VNA
